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Speaker 1: Cool Zone Media.

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Speaker 2: Welcome to it could happen here podcasts where a bunch

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Speaker 2: of incredibly convoluted and very silly financial instruments to shore

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Speaker 2: the entire world economy. I am your host, Bia Wong,

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Speaker 2: and with me today is someone who does not spend

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Speaker 2: all of her time deep in the bowels of arcane

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Speaker 2: bullshit written by different Federal Reserve boards, and that is

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Speaker 2: Maldy Conger, who is the host of the absolutely delightful

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Speaker 2: I mean, okay, I guess this is a who is

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Speaker 2: really winning here kind of christ in terms of the things.

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Speaker 3: Research, Yeah, you spent a lot of time reading stuff

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Speaker 3: written by Federal Reserve guys. I read a lot of

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Speaker 3: stuff written by guys who want to kill the Federal

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Speaker 3: Reserve guys.

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Speaker 4: Yeah.

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Speaker 3: I still don't know what the Federal Reserve is, and

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Speaker 3: I'm not gonna find out.

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Speaker 2: You know, I don't actually think knowing what Federal Reserve

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Speaker 2: is somehow.

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Speaker 3: It doesn't change anything.

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Speaker 2: And I don't think it's actually relevant to this app

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Speaker 2: I mean it kind of. It's obviously it's relevant to everything.

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Speaker 3: But means to say is the reason I'm here is

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Speaker 3: because I don't know what the economy is, and at

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Speaker 3: this point, I'm afraid to find out.

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Speaker 4: And unfortunately your worst fears are happening.

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Speaker 3: Don't worry. By the end of this I will not understand.

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Speaker 4: I am going to attempt to explain the economy, and

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Speaker 4: by by the economy, I mean shadow banking. Yeah.

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Speaker 2: Also, before before I go into this, though, you should,

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Speaker 2: you should listen to Weird Little Guys. It is It's

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Speaker 2: it's really good. I like it all my friends really

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Speaker 2: like it.

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Speaker 3: Thank you.

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Speaker 2: Yeah, it's somehow a nice comma kind of relaxing show

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Speaker 2: about neo Nazis.

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Speaker 3: So that's very chill vibes. Yeah for a show about

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Speaker 3: guys who are trying to like blow up school bus.

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Speaker 5: Yes, yep.

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Speaker 4: So all right, you know I'm reading this. I'm looking

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Speaker 4: over the script.

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Speaker 2: Miraculously this isn't a wait hold on, I think I

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Speaker 2: cut the part.

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Speaker 4: Where people blew up school buses.

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Speaker 2: There was legitimately a segment in here that I might

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Speaker 2: put back in or someone blows up a school bus.

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Speaker 3: But what a crossover event.

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Speaker 2: Oh boy, oh boy, the Saudi is really good at

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Speaker 2: that shit. It turns out, uh okay, okay, But let

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Speaker 2: let's get back to the topic at hand, which is

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Speaker 2: what is shadow banking, and why does it matter to

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Speaker 2: all of us people who live in the normal real

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Speaker 2: world and not in fake finance world.

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Speaker 3: Does it have anything to do with shadow wolves? Unfortately,

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Speaker 3: note what about shadow facts?

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Speaker 2: Sadly, actually, there probably is a connection between the financing

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Speaker 2: for the Lord of the Rings movies and shadow banking.

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Speaker 4: I'm just too tired to work it right now.

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Speaker 3: I've dragged us off track. We haven't even gotten on

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Speaker 3: track yet. What is shadow bank?

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Speaker 2: Okay, so the good news, the good news this is

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Speaker 2: this is the first it's not the last piece of

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Speaker 2: good news. We're gonna ge this episode, but come the

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Speaker 2: definition used by most non academics is actually not that bad.

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Speaker 4: There's a pretty good.

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Speaker 2: It's very wishy washy because it's a congressional report and

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Speaker 2: so it's specifically not supposed to be taking a stance

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Speaker 2: in either direction on anything, because it's it's the Congressional

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Speaker 2: Review Office, and they're supposed to be neutral, et cetera,

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Speaker 2: et cetera. Allegedly, yeah, right, you know, and like obviously

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Speaker 2: they're not, but like you know, it's like kind of

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Speaker 2: fine congressional report on the subject, and they do the

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Speaker 2: thing that almost everyone does, which is they go back

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Speaker 2: to the definition created by the Financial Stability Board, and

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Speaker 2: I'm just gonna I'm just gonna quote that because it's

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Speaker 2: not that bad. Quote financial activities facilitated by institutions other

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Speaker 2: than central banks, banks or public financial institutions.

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Speaker 3: So it's banking that doesn't involve a bank. Yeah, canceled,

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Speaker 3: I'm out. I'm out already.

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Speaker 4: Yes.

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Speaker 3: And they don't mean like me loaning you twenty dollars, no, no, no,

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Speaker 3: of course not. They just mean unregulated banking. Oh yeah,

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Speaker 3: which you can't legally call banking.

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Speaker 2: I mean you actually can't legally call it banking. It's

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Speaker 2: just things get weird really quickly.

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Speaker 3: I mean, I'm not a bank understander, but I know,

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Speaker 3: at least in Virginia, you can't incorporate a business that

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Speaker 3: has the word bank in the title unless you are

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Speaker 3: legally a bank, because that's like misleading.

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Speaker 2: Yeah, I don't think they can legally call themselves a bank,

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Speaker 2: but I guess you can call it banking activity.

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Speaker 3: That's stupid in a matter already.

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Speaker 2: Yes. Oh, you're going to get so much more mad

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Speaker 2: by the end of this. So the base definition is

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Speaker 2: it's not that complicated, right, It's something that does banking

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Speaker 2: stuff that is legally not a bank, you know, And

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Speaker 2: so we could talk about what kinds of things is this, right,

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Speaker 2: it's like private equity firms, it's hedge funds, it's venture

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Speaker 2: capital firms.

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Speaker 3: So it's like evil stuff that ruins the world for

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Speaker 3: no reason except for like ten guys make money. Yeah.

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Speaker 2: But it's also you know, pension funds. It's like insurance companies.

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Speaker 2: It's sovereign wealth funds, business development companies, repot markets, broker dealers,

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Speaker 2: special investment vehicles, securitization vehicles, money market mutual funds, assay

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Speaker 2: backed commercial paper conduits.

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Speaker 3: Hey thing, bud. Most of those things you just said

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Speaker 3: to me are fake and they make me upset.

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Speaker 2: It's really bad.

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Speaker 3: Sovereign wealth funds. Shut up, that's not that's nothing. I

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Speaker 3: still you know, all these all these things are just

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Speaker 3: like different ways of saying like you're poor and you're

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Speaker 3: gonna die.

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Speaker 4: Yeah.

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Speaker 2: I mean, the funny thing is sovereign wealth fund is

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Speaker 2: like kind of a less fake one in that it's

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Speaker 2: like fake, Hey, this is like a fake. It's the well,

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Speaker 2: it's like this is the Kingdom of Saudi Arabia has

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Speaker 2: pooled all of the money it's gotten from. It's like

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Speaker 2: horrific crimes and put them together into one giant thing,

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Speaker 2: and that's a sovereign wealth fund.

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Speaker 3: Oh so it's good, it's what you mean.

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Speaker 2: No, I am a notable. There is, by the way,

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Speaker 2: a camp of people who believe that sovereign wealth funds

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Speaker 2: are like a social list thing and that you could

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Speaker 2: use them to do socialism.

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Speaker 3: I'm going to jump out the window.

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Speaker 2: I think this is so stupid. Yeah, this is we

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Speaker 2: haven't even gotten into the nightmare stuff. So remember I

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Speaker 2: was talking about the Financial Stability Board definition in that

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Speaker 2: congressional report right where it's like, okay, this is a

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Speaker 2: bank that does non banking stuff or a non bank

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Speaker 2: that does banking stuff.

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Speaker 3: Sorry, oh, I guess we should say I guess we

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Speaker 3: forgot to say at the top. The reason you're explaining

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Speaker 3: shadow banking to me is because we saw an article

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Speaker 3: last week that what those those not banks were putting

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Speaker 3: a stop on withdrawals from their not banks and I

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Speaker 3: didn't know what that meant.

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Speaker 2: Yeah, that's amazingly this this is so convoluted.

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Speaker 4: We're not even going to get to that this week.

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Speaker 2: Right, But like that's that's why we're explaining that's why, right,

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Speaker 2: there's like, yeah, there's like there was like a mini

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Speaker 2: bank run going on with these like shadow banks, no

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Speaker 2: stop banks. Yeah, so we're going to get into how

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Speaker 2: that can happen and why. But but before we get there,

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Speaker 2: we need to talk about all, right, to get a

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Speaker 2: sense of the complexity of this. Right, the Congressional report,

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Speaker 2: like the accepted terminology for this is not shadow banks, it.

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Speaker 3: Is, right, that can't be their official name. That's not

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Speaker 3: their government name.

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Speaker 2: No, it's it's non bank financial intermediation.

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Speaker 4: Now what the fuck is that?

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Speaker 2: And this is where this episode goes completely off the

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Speaker 2: rails because the components of what count as intermediation are

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Speaker 2: so complicated. I am not going to try to describe

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Speaker 2: it until literally the end of this.

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Speaker 3: I mean, is it like what is Venmo officially? Really?

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Speaker 3: Venmo's not a bank, but it provides like financial services.

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Speaker 2: Actually, I it by.

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Speaker 3: Because it's because it's like a financial intermediary.

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Speaker 2: Right, Yeah, it might technically be a non bank. I

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Speaker 2: don't know what the regulatory structure is.

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Speaker 3: It's not legally about Yeah, I think I think that

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Speaker 3: technically is one score one for Molie.

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Speaker 2: Yeah, but okay, so this is this is gonna get

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Speaker 2: really bad. Okay. So when I first started researching this episode, right,

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Speaker 2: the first thing that I click on is is the

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Speaker 2: Federal Reserves of how the shadow banking sector works compared

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Speaker 2: to the nomal banking sector. Molly, you have seen this

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Speaker 2: because I posted it as a joke in our group chat.

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Speaker 2: This chart.

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Speaker 4: I have like a very very large, like it is

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Speaker 4: like a big, normal ass size monitor that I like

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Speaker 4: to do my work on. I had to zoom in

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Speaker 4: to three hundred and eighty percent just to make out

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Speaker 4: the letters that label the boxes on this chart. If

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Speaker 4: you want to read it, you have to zoom into

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Speaker 4: five hundred percent.

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Speaker 3: That doesn't seem like a well made chart.

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Speaker 2: No, here's the thing, it's actually really good. It's just

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Speaker 2: this complicated. I learned later from a paper by Copenhagen

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Speaker 2: Business School professor Odny Helga Daughter. We're gonna come back

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Speaker 2: to Hellga Daughter's work a lot in this episode, but

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Speaker 2: I learned from from her because she has also experienced

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Speaker 2: seeing this same chart and going what the is this

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Speaker 2: fuck ass chart? I found out that the Federal Reserve

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Speaker 2: recommends that in order to have the diagram be legible,

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Speaker 2: you're supposed to print this chart as a three foot

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Speaker 2: by four foot poster.

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Speaker 3: Oh that makes sense, like meeting style. But like we're

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Speaker 3: we're on easel.

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Speaker 2: Yeah right, But like again, this is this is a

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Speaker 2: diagram that he's just labeling the parts of the system

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Speaker 2: and making and making like a line that shows how

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Speaker 2: stuff moves through it.

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Speaker 3: I guess I still don't know what we're talking about.

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Speaker 2: Yeah, so this is what we're going to get into

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Speaker 2: in a second. But first we have to talk about

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Speaker 2: something even more bleak, which is that. Oh yeah, by

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Speaker 2: the way, these like non banking bank things like these

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Speaker 2: like all these like venture capital firms, all these hedge funds,

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Speaker 2: all these fucking weird, ghoulish banks that are off banks. Uh. Yeah,

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Speaker 2: they have twice as many assets than the regular banking system.

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Speaker 3: Oh that doesn't seem good.

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Speaker 4: Oh it's about to get worse. It's about to get worse, Molly.

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Speaker 3: That's that's like saying I keep seventy percent of the

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Speaker 3: food in my house outside on the porch, like it

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Speaker 3: goes in the fridge.

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Speaker 4: Oh oh, oh, it's so bad, it's so bad.

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Speaker 2: So okay, there's a pretty good congressional report that I

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Speaker 2: was talking about earlier that has this terrifying quote quote.

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Speaker 2: As of twenty twenty three, the broad measured total financial

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Speaker 2: assets and narrow measure assets at nbfisis.

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Speaker 4: Is the shadow banks.

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Speaker 2: Reached eighty five point seven trillion dollars and twenty two

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Speaker 2: point two trillion dollars, respectively in the United States.

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Speaker 3: But that's more than our GDP.

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Speaker 4: That's almost three times our GDP.

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Speaker 3: So that's a fake amount of money. Yes, that's not real.

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Speaker 2: At all, but it kind of is. Right, These compared

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Speaker 2: to total financial assets of thirty one point one trillion

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Speaker 2: dollars at banks in the same period. So again this

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Speaker 2: is this is almost three times our GDP in assets

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Speaker 2: that they manage or control.

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Speaker 3: So where does the money live?

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Speaker 2: In a whole bunch of unbelievably calm, eluded bullshit like

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Speaker 2: combinations of like loans and real estate and stuff like

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Speaker 2: that real money.

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Speaker 3: So like, okay, imagine this is schoolhouse rock and instead

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Speaker 3: of the singing bill, you're like a dollar bill, Like

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Speaker 3: where are you we are about to explain this where

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Speaker 3: does the money live?

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Speaker 4: Yeah?

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Speaker 2: So okay, okay, we're we are about one huge paragraphs

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Speaker 2: away from getting to this or like one paragraph Okay,

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Speaker 2: So the other thing that's very important about this, and

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Speaker 2: this is something Mollie was kind of touching out the

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Speaker 2: beginning to get the appen So maybe I should have

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Speaker 2: opened with this. Yeah, these people, these are the people

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Speaker 2: who blew up the economy in two thousand and eight.

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Speaker 3: Yeah, because they're making stuff up.

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Speaker 2: Yeah, it's so, it's so bullshit, Molly, You're gonna get

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Speaker 2: so mad.

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Speaker 3: If this is Calvin Ball, fuck you I win.

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Speaker 2: Yeah, it literally is. It's nonsense. It's gibberish. They're doing

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Speaker 2: fucking betting markets with the entire world economy.

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Speaker 3: Oh yeah, we can all do that now.

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Speaker 2: Yeah, it's fun. It's like we now have the power

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Speaker 2: to do the shit that destroyed the world economy in

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Speaker 2: two thousand and eight. So that The thing about shadow banking,

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Speaker 2: and the reason why it's complicated to explain is that

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Speaker 2: it's a catch all term for like a million types of.

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Speaker 4: Institutions that do different things.

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Speaker 2: Right, the commonality they have is that they're all not

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Speaker 2: regulated by the banking regulations.

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Speaker 3: Right, It's like, we found a way to do financial

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Speaker 3: crime that's not illegal because they forgot to make this illegal.

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Speaker 2: Yeah, and you know, but but the thing is it's

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Speaker 2: so embedded into the system that, like the US debt

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Speaker 2: working is dependent on the shadow banks buying it.

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Speaker 3: Like I don't believe in that either, So I'm good.

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Speaker 4: Oh it's so fake, Molly.

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Speaker 2: I'm not even going to attempt to explain what an

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Speaker 2: overnight repo purchases to you, because it's the fakest thing

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Speaker 2: I've ever seen. Where they make one trillion dollars exist

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Speaker 2: overnight and then it stops existing at the end of

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Speaker 2: the night.

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Speaker 4: It's incredible.

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Speaker 3: I love how much of the economy is based on

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Speaker 3: guys just imagining stuff and agreeing on the thing they

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Speaker 3: imagined and then trading their imaginary tokens like this is

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Speaker 3: fucking Pog's.

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Speaker 2: Yep, this is this, this, this is this is unfortunately

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Speaker 2: what what our entire world is based on. It's so fun.

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Speaker 2: Oh god, Okay, So what is actually shadow banking?

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Speaker 4: I've given you.

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Speaker 2: Like the broadest definition possible, which is like it again,

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Speaker 2: it's the it's doing bank ship without being a bank.

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Speaker 2: But let's go back to the beginning of the term,

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Speaker 2: which is where most people tend to start or get

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Speaker 2: to eventually. This is from an IMF paper quote. The

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Speaker 2: term shadow bank was coined by economist Paul mccolly at

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Speaker 2: a two thousand and seven speech at the Annual Financial

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Speaker 2: Symposium hosted by the Kansas City Federal Reserve Bank in

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Speaker 2: Jackson Hole, Wyoming. And basically, it's institutions that borrow money

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Speaker 2: in the short term through money markets to finance long

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Speaker 2: term loans. But they aren't banks, so they can't go

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Speaker 2: through the FED.

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Speaker 3: They're financing loans with other loans.

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Speaker 4: Yeah, we're gonna so from from from a not bank.

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Speaker 3: Yeah, but the big loan is from a real bank,

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Speaker 3: and then the little loan is from a fake bank.

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Speaker 3: Give me none of the money is read.

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Speaker 2: Hold on, hold on, Okay, we're going to get there.

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Speaker 2: We're going to explain this in terms of burgers. It's

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Speaker 2: going to be okay.

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Speaker 4: I believe in us perfect, perfect, Yes.

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Speaker 2: But the other thing he describes is, and this is

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Speaker 2: from Helga daughter quote in the speech, he describes shadow

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Speaker 2: banking as the whole alphabet soup of leveraged up investment conduits, vehicles,

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Speaker 2: and structures. So what he's talking about specifically is these

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Speaker 2: are the guys who blew up the economy two does

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Speaker 2: eight like these specifically, this is what he's talking about, right,

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Speaker 2: These are the people who took a mortgage and then

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Speaker 2: did a bunch of bullshit to it, and what's called

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Speaker 2: a securitization chain. They did a bunch of bullshit to

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Speaker 2: it so you could give the loan to someone else,

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Speaker 2: you could sell to someone else, and this blew up

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Speaker 2: the entire world economy.

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Speaker 4: That's what he's talking about. He's talking about the.

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Speaker 2: Banks that are not banks, the shadow banks that did

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Speaker 2: all of this bullshit to turn like someone's mortgage into

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Speaker 2: a fucking thing you could bet on.

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Speaker 3: So selling debt is like selling the idea of future money. Yeah,

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Speaker 3: and then sometimes that future money doesn't come.

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Speaker 4: Yeah, so it doesn't exist.

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Speaker 2: So okay, I will say, you do not need to

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Speaker 2: understand this yet, because we haven't.

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Speaker 4: We still have not already the actual explanation.

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Speaker 3: I'm never going to.

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Speaker 4: I believe in us. We can do this. It's not

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Speaker 4: that bad, Okay.

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Speaker 3: I'm not torturing your on purpose.

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Speaker 2: I'm just no, it's okay, I believe in you. So

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Speaker 2: I want to mention that I'm very indebted here to

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Speaker 2: the paper I mentioned earlier from Copenhagen Business School professor

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Speaker 2: Adny Helga Daughter who wrote of she wrote a very

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Speaker 2: good simplified explanation of this in her Review of International

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Speaker 2: Political Economy article called Banking Upside Down the Implicit Politics

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Speaker 2: of Shadow Banking Expertise. But okay, as you can tell

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Speaker 2: by the fact that it's called Banking upside Down the

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Speaker 2: Implicit Politics of Shadow Banking Expertise, this has been when

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Speaker 2: she's simplifying it. She's simplifying it from like economists down

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Speaker 2: to like a political scientist or an anthropologist can understand this.

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Speaker 2: I am about to attempt to simplify this down to

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Speaker 2: a regular person.

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Speaker 4: Can I understand this? So I'm drawing on.

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Speaker 2: A lot of her stuff for the first part of

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Speaker 2: this explanation, but I am I've turned it into burgers.

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Speaker 3: So I'll do my best. I'm being very brave.

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Speaker 4: Okay.

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Speaker 2: So a shadow bank, right, it's something that does banking shit.

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Speaker 4: That's not a bank. So what do I mean by

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Speaker 4: banking shit?

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Speaker 3: That was my next question. Yes, I think we need

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Speaker 3: to start with what is a bank? Yes?

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Speaker 2: So first, so okay, okay, and this is this is

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Speaker 2: this is where we're starting here.

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Speaker 4: What does a bank do?

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Speaker 3: I put my money in it and they hold it

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Speaker 3: for me.

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Speaker 4: So no, actually, and this is the interesting part.

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Speaker 3: No, they do stuff with it. Oh yeah, they're holding

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Speaker 3: onto the promise of my money.

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Speaker 2: Yeah, so okay, let's let's just let's just look at

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Speaker 2: this for a second. So okay, So regular people give

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Speaker 2: them money to store in the bank.

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Speaker 4: This is called a deposit.

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Speaker 2: The bank takes your money and loans it out right

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Speaker 2: and uses that to make more money. This is how

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Speaker 2: it pays you interest, right, is that it's it's taking

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Speaker 2: your money and it's loaning it out to other people.

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Speaker 2: It's buying things with it.

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Speaker 3: That part I understand.

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Speaker 2: Yeah, and this is obviously a cartoon image. And I

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Speaker 2: know there's gonna be econ people who are gonna be

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Speaker 2: mad at me. Look, if you understand, why.

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Speaker 3: Are they listening to this? If you already know what

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Speaker 3: this means, go away. This isn't for you. I'm not

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Speaker 3: humiliating myself for your entertainment, Like.

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Speaker 4: For the political economy people here.

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Speaker 2: When I say stuff that might that's like technically kind

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Speaker 2: of fuzzy.

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Speaker 3: It's for me the podcast idiot.

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Speaker 2: Yeah, like you you understand this, Like I work at

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Speaker 2: the level of Hamburgers here, so like we have to

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Speaker 2: do some abstractions.

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Speaker 4: So okay, the important thing for our purposes.

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Speaker 2: Right, is that there's two things here, right, There's like

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Speaker 2: the deposits, the money you give them, and then there's

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Speaker 2: the loans, right, and these operates on different timelines. Right.

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Speaker 4: You can take the deposit.

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Speaker 2: Out at any time, least in theory, but they can't

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Speaker 2: get the money from the loan back at any time.

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Speaker 4: Right now, This is like one of the critical things of.

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Speaker 2: What a bank is is is this timeline thing. Right.

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Speaker 2: It turns your your money, which you can take out

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Speaker 2: at any time, into a different kind of thing, this loan,

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Speaker 2: which can't be taken out immediately, right, and then they

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Speaker 2: use that to make money. So this is called maturity transformation.

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Speaker 2: This is a very simple concept they have made very complicated.

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Speaker 2: This is one of the core aspects of that definition

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Speaker 2: I was talking about earlier. This is one of the

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Speaker 2: four things in it. But you now understand this. It's

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Speaker 2: not that complicated. It's it's takes short term make long

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Speaker 2: term and we'll get to doing the reverse in a second.

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Speaker 3: Oh, I don't think it works the other way.

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Speaker 4: Yeah, it's gonna go so badly. It's so badly.

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Speaker 3: I don't know about bank, but just generally speaking, like

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Speaker 3: in terms of time and like how like material reality works.

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00:18:48,359 --> 00:18:49,800
Speaker 3: I don't think it works the other way.

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Speaker 2: It's it's not great. It's not great, Molly, it's not great. Okay,

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00:18:53,800 --> 00:18:57,280
Speaker 2: So okay. There is, however, a problem here, right, which

404
00:18:57,320 --> 00:19:00,240
Speaker 2: is what happens if everyone tries to get their short

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Speaker 2: term money back at the same time.

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Speaker 3: I only can't, yeah, right, because you have deposit insurance.

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Speaker 2: Yeah right, because the banks aren't holding short term cash.

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00:19:09,800 --> 00:19:12,919
Speaker 2: What they're holding is long term loans, and those loans

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00:19:13,480 --> 00:19:18,240
Speaker 2: like you can't pay someone alone. Well okay, Actually, this

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Speaker 2: entire the crux of this episode is they find that

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Speaker 2: they did do that.

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Speaker 4: Yeah, yes, and it blew up the entire world economy.

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Speaker 3: But if but if I wanted forty thousand dollars out

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Speaker 3: of my if I had a checking out with forty

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Speaker 3: thousand dollars in it, yeah, and they gave me my

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Speaker 3: neighbor's mortgage as a prompt. That would worked for me.

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Speaker 2: That would have worked for no fuck that, No, no, no,

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Speaker 2: you need you need, you need, you need something that

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Speaker 2: can buy a burger, and they're not giving you that.

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Speaker 2: So okay, this is very very bad. If people try

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Speaker 2: to do this, it is called a bank run. It

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Speaker 2: is not good, it's bad. Yeah, And so this this

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Speaker 2: blew up the entire world economy so many goddamn times

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Speaker 2: that eventually we got financial regulation. Now, this this regulation

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Speaker 2: requires banks to have money that is like actual cash

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Speaker 2: they can hand you like right now, on hand at

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Speaker 2: all times, and the government gets to and this is

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00:20:08,040 --> 00:20:10,480
Speaker 2: that's a little bit simpflication, but like, yeah, that's how it.

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Speaker 3: Works, right, Like, and it's insured by the government.

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Speaker 2: Yeah, I think the government will give you your money

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Speaker 2: back if if the bank goes under up to like

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Speaker 2: a certain amount of dollars ensured. Yep, this is this

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Speaker 2: this that's that's what that means, right, the government will

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Speaker 2: give you your money back.

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Speaker 4: But also there's a there's a trade off to this.

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Speaker 2: So this is a massive benefit for the banks, right

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00:20:29,600 --> 00:20:31,280
Speaker 2: the fact the fact that if they go under, all

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Speaker 2: of their assets will be repaid by the government. It's

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00:20:33,560 --> 00:20:35,840
Speaker 2: a it's a massive benefit for them because it means

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Speaker 2: that putting your money in the bank.

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Speaker 4: Is like safe.

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Speaker 3: Yeah, I love that for me, right, Yeah.

443
00:20:39,880 --> 00:20:40,399
Speaker 4: It's good.

444
00:20:40,720 --> 00:20:43,760
Speaker 2: Now, the cost to the banks is that the Feds

445
00:20:43,800 --> 00:20:45,880
Speaker 2: get to see their balance sheet, right, the Feds get

446
00:20:45,880 --> 00:20:47,520
Speaker 2: to see what they're doing with their fucking money, and

447
00:20:47,560 --> 00:20:50,440
Speaker 2: they get to make sure that these banks aren't doing

448
00:20:50,600 --> 00:20:51,320
Speaker 2: insane shit.

449
00:20:51,480 --> 00:20:53,840
Speaker 3: Okay, that makes sense because they're insurance.

450
00:20:53,920 --> 00:20:57,600
Speaker 2: Yeah, and that like they're not doing like unbelievably risky

451
00:20:57,800 --> 00:21:00,680
Speaker 2: awful ship. And also that they're actually holding enough money

452
00:21:00,680 --> 00:21:02,200
Speaker 2: to be able to pay people out right.

453
00:21:02,240 --> 00:21:04,440
Speaker 3: Okay, so far, so good. I wait, I understand bank.

454
00:21:05,280 --> 00:21:11,040
Speaker 2: Yeah. Now shadow banking boldly asked the question, Okay, but

455
00:21:11,080 --> 00:21:14,560
Speaker 2: what if you did all of the banking backwards, no

456
00:21:14,640 --> 00:21:18,720
Speaker 2: one had access to the books, and the government will

457
00:21:18,720 --> 00:21:21,920
Speaker 2: only pay you back if the entire world economy looks

458
00:21:21,920 --> 00:21:23,080
Speaker 2: like it's going to die.

459
00:21:23,520 --> 00:21:26,200
Speaker 3: I feel like at that point the government should just

460
00:21:26,200 --> 00:21:26,800
Speaker 3: just step back.

461
00:21:26,920 --> 00:21:29,160
Speaker 4: And here's the thing.

462
00:21:29,200 --> 00:21:32,280
Speaker 2: Here's the thing, right I I I yeah, Like I'm

463
00:21:32,320 --> 00:21:34,320
Speaker 2: so down with this, like yeah, I don't know, fuck it,

464
00:21:34,440 --> 00:21:36,800
Speaker 2: Like every single one of your motherfuckers is gonna pay

465
00:21:36,840 --> 00:21:39,080
Speaker 2: this off by working as a barista for thirty years,

466
00:21:39,080 --> 00:21:41,960
Speaker 2: like fuck you. But the government was like, nah, we

467
00:21:42,000 --> 00:21:44,160
Speaker 2: want like we want capitalism to keep working.

468
00:21:44,320 --> 00:21:47,000
Speaker 3: Make every hedge fund manager work at a waffle house.

469
00:21:47,080 --> 00:21:59,240
Speaker 5: Yeah, fuck them.

470
00:21:59,359 --> 00:22:01,359
Speaker 2: Okay, I'm gonna say something and then I'm gonna make

471
00:22:01,359 --> 00:22:05,520
Speaker 2: a disclaim. So the kind of shadow banks that did

472
00:22:05,520 --> 00:22:09,440
Speaker 2: two thousand and eight work in the opposite direction. They

473
00:22:09,560 --> 00:22:12,960
Speaker 2: start with debt, they take that debt, and they turn

474
00:22:13,040 --> 00:22:16,640
Speaker 2: that debt into like cash, right.

475
00:22:17,160 --> 00:22:17,879
Speaker 3: Can I do that?

476
00:22:18,359 --> 00:22:18,439
Speaker 2: No?

477
00:22:20,240 --> 00:22:21,959
Speaker 3: Does that work for me at mid No?

478
00:22:22,800 --> 00:22:24,960
Speaker 2: So okay, And I also want to mention there's a

479
00:22:25,000 --> 00:22:27,000
Speaker 2: bunch of other kinds of shadow banks. The kind of

480
00:22:27,040 --> 00:22:29,960
Speaker 2: shadow bank that's going under right now is not really this.

481
00:22:30,760 --> 00:22:33,399
Speaker 2: The kind of shadow bank that's like exploding right now

482
00:22:33,440 --> 00:22:36,040
Speaker 2: is a kind of shadow bank that's like what if

483
00:22:36,080 --> 00:22:39,920
Speaker 2: a bank that wasn't a bank gave a completely unregulated

484
00:22:40,000 --> 00:22:44,439
Speaker 2: loan with secret terms to a corporation, And that's the

485
00:22:44,440 --> 00:22:47,440
Speaker 2: one that's going under right now. But for a long

486
00:22:47,480 --> 00:22:49,320
Speaker 2: long time, the kind of shadow bank that was really

487
00:22:49,320 --> 00:22:51,840
Speaker 2: important to the global economy, and this is still like

488
00:22:51,880 --> 00:22:55,240
Speaker 2: a massive portion of how all of the economic system works,

489
00:22:55,800 --> 00:22:58,720
Speaker 2: is these ones where you're trying to take debt and

490
00:22:58,800 --> 00:23:01,080
Speaker 2: turn it into something you can trade for cash.

491
00:23:01,880 --> 00:23:04,600
Speaker 4: So, okay, you take that, right. You start off with

492
00:23:04,800 --> 00:23:05,440
Speaker 4: a mortgage.

493
00:23:05,520 --> 00:23:09,120
Speaker 2: Okay, so this mortgagees pay out over the extremely long term, right,

494
00:23:09,520 --> 00:23:12,000
Speaker 2: but you want to be able to trade this mortgage

495
00:23:12,040 --> 00:23:14,159
Speaker 2: for cash, right, And this.

496
00:23:14,040 --> 00:23:16,000
Speaker 4: Is a process called securitization.

497
00:23:16,920 --> 00:23:19,240
Speaker 2: Turning this mortgage into something you can sell for cash,

498
00:23:19,320 --> 00:23:23,640
Speaker 2: is making it into what's called a security. So now

499
00:23:23,760 --> 00:23:26,840
Speaker 2: what happens right when his packaged is into a security

500
00:23:26,840 --> 00:23:29,760
Speaker 2: when there's a securitization process, and then like the regular bank,

501
00:23:29,960 --> 00:23:32,760
Speaker 2: the regular bank sends the mortgage to the shadow bank,

502
00:23:33,080 --> 00:23:37,000
Speaker 2: and the shadow bank like does like stuff and turns

503
00:23:37,000 --> 00:23:39,960
Speaker 2: it into a security. And now what this means is

504
00:23:39,960 --> 00:23:42,480
Speaker 2: that instead if you who paid the mortgage owing money

505
00:23:42,520 --> 00:23:44,960
Speaker 2: to the bank, you own it to the shadow bank

506
00:23:45,160 --> 00:23:46,960
Speaker 2: or whoever the fuck the shadow bank sells it to.

507
00:23:47,160 --> 00:23:50,800
Speaker 3: Right, Okay, so the real bank is involved. The real

508
00:23:50,800 --> 00:23:52,160
Speaker 3: bank is involved.

509
00:23:51,840 --> 00:23:53,960
Speaker 2: Yes, oh yes, the real bank is making so much

510
00:23:53,960 --> 00:23:55,960
Speaker 2: money off of this is this is why two thousand

511
00:23:56,000 --> 00:23:57,680
Speaker 2: and eight happened because Wells.

512
00:23:57,480 --> 00:23:59,280
Speaker 3: Fargo did this with everybody's mortgage.

513
00:23:59,480 --> 00:24:00,720
Speaker 4: Oh yeah, yeah, okay.

514
00:24:00,520 --> 00:24:02,200
Speaker 3: Because I couldn't figure out because you said this is

515
00:24:02,200 --> 00:24:03,400
Speaker 3: aw two doosy name, and I was like, I thought,

516
00:24:03,400 --> 00:24:05,760
Speaker 3: Wells Fargo did that. That's a real bank. Oh, a

517
00:24:05,880 --> 00:24:07,479
Speaker 3: real bank was shadow banking.

518
00:24:07,600 --> 00:24:11,320
Speaker 2: The real bank figured out a way to sell their mortgages.

519
00:24:11,920 --> 00:24:14,439
Speaker 4: And it's gonna get much worse as we go through this.

520
00:24:14,920 --> 00:24:17,679
Speaker 2: But that's what causes this, right, is like turning is

521
00:24:17,760 --> 00:24:22,200
Speaker 2: turning these mortgages into these like securities and like these

522
00:24:22,200 --> 00:24:26,320
Speaker 2: like collateralized debt obligations and these like special packaged bullshit

523
00:24:26,359 --> 00:24:28,480
Speaker 2: that you could sell to someone. So the way I

524
00:24:28,480 --> 00:24:31,080
Speaker 2: would describe this is it's like, do you know how

525
00:24:31,119 --> 00:24:31,959
Speaker 2: a bond works?

526
00:24:32,240 --> 00:24:33,800
Speaker 3: Honestly, Mia, I do not.

527
00:24:35,680 --> 00:24:38,760
Speaker 4: Okay, let's let's do this. We can we can do this. Okay.

528
00:24:38,800 --> 00:24:41,199
Speaker 2: So the the kind of bond that you are normally

529
00:24:41,280 --> 00:24:44,600
Speaker 2: likely to encounter is a government bond. Yeah, okay, So

530
00:24:44,720 --> 00:24:47,639
Speaker 2: you you pay the government money to buy the bond,

531
00:24:48,640 --> 00:24:50,800
Speaker 2: and what the bond says is at a certain point

532
00:24:50,800 --> 00:24:53,639
Speaker 2: in time, you hand it back to the government and

533
00:24:53,680 --> 00:24:54,760
Speaker 2: they pay you more money.

534
00:24:54,840 --> 00:24:56,120
Speaker 3: Right, It's like a promise for later.

535
00:24:56,480 --> 00:24:59,040
Speaker 4: Yeah. Right, So it's it's basically a.

536
00:24:59,000 --> 00:25:02,400
Speaker 2: Loan, but it's a loan in a form where like

537
00:25:02,480 --> 00:25:05,760
Speaker 2: the government's technically like selling it and and and then

538
00:25:05,760 --> 00:25:08,119
Speaker 2: the other thing about bonds, right is if you hand

539
00:25:08,200 --> 00:25:11,119
Speaker 2: the bond to someone else, well okay, I mean this

540
00:25:11,160 --> 00:25:13,800
Speaker 2: is technically bear bonds, but like you can you can

541
00:25:13,880 --> 00:25:16,960
Speaker 2: then give the bond to someone else and now and

542
00:25:17,000 --> 00:25:18,719
Speaker 2: now if they give it back to the government, they

543
00:25:18,720 --> 00:25:20,320
Speaker 2: get the money in like ten years. They get the

544
00:25:20,359 --> 00:25:23,000
Speaker 2: money right, right, Okay, I get that, and you can

545
00:25:23,080 --> 00:25:24,919
Speaker 2: sell these things. And this is what these people are

546
00:25:24,960 --> 00:25:26,720
Speaker 2: doing with mortgages.

547
00:25:27,880 --> 00:25:30,440
Speaker 3: That's not as like secured as like a government bond.

548
00:25:30,480 --> 00:25:32,119
Speaker 3: Because if I had one hundred dollars government, like, if

549
00:25:32,119 --> 00:25:34,199
Speaker 3: I have a one hundred dollars Bearers bond, I know

550
00:25:34,359 --> 00:25:36,400
Speaker 3: for a fact on the date on the bond, it's

551
00:25:36,400 --> 00:25:37,600
Speaker 3: gonna be worth one hundred dollars.

552
00:25:37,760 --> 00:25:39,160
Speaker 4: Yeah, they're gonna pay out right.

553
00:25:39,440 --> 00:25:43,439
Speaker 3: But if it's a mortgage market, the government's gonna pay it.

554
00:25:43,480 --> 00:25:46,240
Speaker 3: But like the mortgage, the company has them work. That's

555
00:25:46,280 --> 00:25:49,080
Speaker 3: not Yep, that's not real. That's not money. Nope, yep,

556
00:25:49,200 --> 00:25:51,120
Speaker 3: that's like that's a that's a promise. But like my hand,

557
00:25:51,160 --> 00:25:51,960
Speaker 3: it's behind my back.

558
00:25:52,359 --> 00:25:53,560
Speaker 4: Yeah, it's it's a shit show.

559
00:25:53,840 --> 00:25:57,080
Speaker 2: And this whole process is the largest sort of I'm

560
00:25:57,080 --> 00:25:58,680
Speaker 2: not sure if it's actually the largest that I would

561
00:25:58,720 --> 00:26:01,719
Speaker 2: need to actually yet I've never I haven't seen in

562
00:26:01,760 --> 00:26:03,880
Speaker 2: death breakdown sectorially, but like.

563
00:26:03,920 --> 00:26:06,040
Speaker 3: None of this is real. You could just say whatever.

564
00:26:06,760 --> 00:26:08,359
Speaker 2: This this is one of the most important kind of

565
00:26:08,359 --> 00:26:12,800
Speaker 2: shadow banks because in order to turn this mortgage into security,

566
00:26:12,840 --> 00:26:15,360
Speaker 2: the moment you do that, you do this by creating

567
00:26:15,400 --> 00:26:18,280
Speaker 2: what's called a special purpose vehicle, or someone else creates one.

568
00:26:18,560 --> 00:26:21,280
Speaker 2: It's called a special purpose vehicle. Yeah, it's it's a nightmare.

569
00:26:21,320 --> 00:26:22,000
Speaker 2: It's a nightmare.

570
00:26:22,960 --> 00:26:24,760
Speaker 3: I'm gonna put this mortgage on a roller coaster.

571
00:26:25,119 --> 00:26:28,600
Speaker 4: Yeah, it's fucking ridiculous. Right, it's a special purpose vehicle.

572
00:26:28,840 --> 00:26:30,080
Speaker 4: Is it does a loopy loop.

573
00:26:30,760 --> 00:26:32,560
Speaker 2: But the moment you create one of these that the

574
00:26:32,560 --> 00:26:35,760
Speaker 2: moment you create one of these like security mortgages, right,

575
00:26:36,320 --> 00:26:37,120
Speaker 2: that's a shadow bank.

576
00:26:37,280 --> 00:26:38,760
Speaker 4: If you've created a shadow bank.

577
00:26:38,680 --> 00:26:40,800
Speaker 3: Right, because that's not real banking. That's shadow bank.

578
00:26:41,040 --> 00:26:43,520
Speaker 2: Yep, Because because you're creating another entity that is not

579
00:26:43,600 --> 00:26:45,719
Speaker 2: a bank that's doing the banking stuff.

580
00:26:45,960 --> 00:26:47,920
Speaker 3: I thought that the banking and the shadow banking were

581
00:26:47,920 --> 00:26:51,360
Speaker 3: like separate things, right, because it's shadow it's like they're

582
00:26:51,359 --> 00:26:52,080
Speaker 3: doing non think.

583
00:26:52,640 --> 00:26:53,199
Speaker 2: They're all in.

584
00:26:55,080 --> 00:26:58,840
Speaker 3: If the bank is the shadow banking, I would I'm stupid,

585
00:26:58,880 --> 00:26:59,679
Speaker 3: but I would call that.

586
00:26:59,680 --> 00:27:02,800
Speaker 2: A This is this is another thing that costs two

587
00:27:02,800 --> 00:27:04,639
Speaker 2: thousand and eight because a bunch of what was is

588
00:27:05,000 --> 00:27:09,080
Speaker 2: a crime. Because our country is run by the bourgeoisie. Molly,

589
00:27:09,240 --> 00:27:10,520
Speaker 2: that that's why it's not a crime.

590
00:27:10,680 --> 00:27:12,240
Speaker 3: You're just telling me this for the first time.

591
00:27:13,160 --> 00:27:16,240
Speaker 2: Yeah, it's bad. So what what what happened? What happened

592
00:27:16,280 --> 00:27:18,120
Speaker 2: in two thousand and eight. One of the things that happened, right,

593
00:27:18,200 --> 00:27:20,440
Speaker 2: is so all of these regulators are supposed to be

594
00:27:20,520 --> 00:27:22,600
Speaker 2: looking at the balance sheets of these companies.

595
00:27:22,359 --> 00:27:24,600
Speaker 3: But they're hiding stuff off the book.

596
00:27:24,920 --> 00:27:27,359
Speaker 2: Yeah, they were hiding these things in these like special

597
00:27:27,359 --> 00:27:29,800
Speaker 2: purpose vehicles, like in these like shadow banks.

598
00:27:29,840 --> 00:27:32,160
Speaker 3: They didn't open the trunks on the special purpose vehicles.

599
00:27:32,440 --> 00:27:34,200
Speaker 2: Yeah, so no one could see the fucking dead bodies

600
00:27:34,200 --> 00:27:36,320
Speaker 2: in the trunks of the vehicles because they weren't on

601
00:27:36,400 --> 00:27:38,520
Speaker 2: the balance sheet that like the government had access to.

602
00:27:38,760 --> 00:27:40,280
Speaker 3: What's the point of the balance sheet if you don't

603
00:27:40,280 --> 00:27:41,400
Speaker 3: put the whole balance on it.

604
00:27:42,680 --> 00:27:46,320
Speaker 2: I'm fucking I don't know. And this is like legitimately

605
00:27:46,320 --> 00:27:49,080
Speaker 2: when when when you read the accounts of like why

606
00:27:49,119 --> 00:27:51,240
Speaker 2: shadow Making Us exploded, by the way it's exploded in

607
00:27:51,359 --> 00:27:53,960
Speaker 2: two thousand and eight, it's like way bigger and exploded.

608
00:27:53,520 --> 00:27:56,600
Speaker 3: Like in popularity or like exploded as in like distrubularity.

609
00:27:56,800 --> 00:27:58,840
Speaker 4: There's so much, there's so much more, there's so much

610
00:27:58,840 --> 00:27:59,280
Speaker 4: more of it.

611
00:27:59,359 --> 00:28:02,199
Speaker 3: Because also because it went so well, it went so

612
00:28:02,280 --> 00:28:03,560
Speaker 3: well in two thousand and eight, and now.

613
00:28:04,040 --> 00:28:06,199
Speaker 2: Because here's the thing, after two thousand and eight, we

614
00:28:06,240 --> 00:28:09,560
Speaker 2: got like a little tiny bit of banking regulation, and

615
00:28:09,640 --> 00:28:12,679
Speaker 2: the banks lost their fucking minds, and so more and

616
00:28:12,720 --> 00:28:16,480
Speaker 2: more money went into all of these unhid shadow making things.

617
00:28:16,560 --> 00:28:18,560
Speaker 3: Okay, but so like when a toddler has a tantrum,

618
00:28:18,600 --> 00:28:20,280
Speaker 3: you don't give them a billion dollars.

619
00:28:20,680 --> 00:28:23,199
Speaker 2: When the shadow banks went under, these things were not

620
00:28:23,240 --> 00:28:23,960
Speaker 2: backed by the government.

621
00:28:24,000 --> 00:28:25,080
Speaker 4: The government bailed them out anyways.

622
00:28:25,119 --> 00:28:26,159
Speaker 3: Yeah, they didn't have to do that.

623
00:28:26,560 --> 00:28:26,840
Speaker 2: Nope.

624
00:28:26,840 --> 00:28:29,120
Speaker 3: So they really they learned their lesson. They really learned

625
00:28:29,119 --> 00:28:30,119
Speaker 3: their lesson this time.

626
00:28:30,400 --> 00:28:32,800
Speaker 2: Yeah, Like they bailed out these banks and they fucking

627
00:28:32,800 --> 00:28:35,600
Speaker 2: sold you out, and like you know, like and one

628
00:28:35,640 --> 00:28:37,520
Speaker 2: of the things that I think people have forgotten was

629
00:28:37,520 --> 00:28:40,360
Speaker 2: there's this thing called robocalls. During the Obama administration, right,

630
00:28:40,800 --> 00:28:44,120
Speaker 2: part of how the financial recovery happened was that all

631
00:28:44,200 --> 00:28:48,440
Speaker 2: these banks would like go to courthouses, right, and they

632
00:28:48,480 --> 00:28:52,600
Speaker 2: would just repossess mortgages on mass oh.

633
00:28:52,040 --> 00:28:54,040
Speaker 4: And they had like a robot that was like signed it.

634
00:28:54,360 --> 00:28:57,000
Speaker 2: It would just sign like a blank check sign off

635
00:28:57,040 --> 00:28:59,040
Speaker 2: on all of these mortgages that were supposed to be underwater.

636
00:28:59,760 --> 00:29:02,680
Speaker 2: And they would just steal people's houses, people who were

637
00:29:02,680 --> 00:29:04,640
Speaker 2: on top of their payments. People who like to know money,

638
00:29:04,760 --> 00:29:07,160
Speaker 2: they would just take their houses. And this happened on

639
00:29:07,400 --> 00:29:10,440
Speaker 2: mass And this is like how the banks recovered. Was

640
00:29:10,440 --> 00:29:13,400
Speaker 2: they stole everyone's houses. And that's a crime, right, it

641
00:29:13,400 --> 00:29:16,200
Speaker 2: should have been a crime, like it was illegal. It

642
00:29:16,200 --> 00:29:17,080
Speaker 2: didn't matter though.

643
00:29:16,960 --> 00:29:19,720
Speaker 3: Because everything you're describing to me as a crime.

644
00:29:19,560 --> 00:29:21,880
Speaker 2: It's so nightmarish. Well, it's here's the thing, most of

645
00:29:21,920 --> 00:29:24,280
Speaker 2: this of them describing is not a crime. This was

646
00:29:24,400 --> 00:29:27,920
Speaker 2: actually a crime. But why isn't nobody in jail because

647
00:29:27,960 --> 00:29:30,640
Speaker 2: Barack Obama went up in front of these people and said,

648
00:29:30,720 --> 00:29:32,920
Speaker 2: I am the only thing standing between you and the guillotines.

649
00:29:33,160 --> 00:29:34,600
Speaker 2: I'm pretty sure that's a direct quote.

650
00:29:34,640 --> 00:29:36,680
Speaker 3: And why didn't he bring the guillotine with him?

651
00:29:36,800 --> 00:29:38,800
Speaker 4: Because he wants the capitalist system to continue.

652
00:29:40,560 --> 00:29:44,320
Speaker 3: Question, I'm just upset.

653
00:29:44,440 --> 00:29:47,120
Speaker 2: It's not good. Okay, So let let's go. Let's get

654
00:29:47,160 --> 00:29:49,000
Speaker 2: you another question that you asked, which is why why

655
00:29:49,080 --> 00:29:51,400
Speaker 2: would you do this? Why would you do this.

656
00:29:51,600 --> 00:29:52,440
Speaker 3: To make money?

657
00:29:52,760 --> 00:29:54,720
Speaker 4: Yes, but it's actually more complicated than that.

658
00:29:54,880 --> 00:29:58,920
Speaker 2: Oh okay. So on the one hand, these assets, you know,

659
00:29:59,000 --> 00:30:01,400
Speaker 2: a mortgage does make make more money than just putting

660
00:30:01,400 --> 00:30:04,280
Speaker 2: your money in the bank. Right, that's like the basis

661
00:30:04,280 --> 00:30:07,000
Speaker 2: of banking is that they can use your money that's

662
00:30:07,000 --> 00:30:08,560
Speaker 2: sitting in the bank and getting interest, and then they

663
00:30:08,640 --> 00:30:10,200
Speaker 2: make more money by spending it elsewhere.

664
00:30:10,440 --> 00:30:12,400
Speaker 3: But so they're just doing this because they hate us,

665
00:30:12,600 --> 00:30:13,600
Speaker 3: not just to make money.

666
00:30:13,760 --> 00:30:16,000
Speaker 4: No, there is an actual explanation.

667
00:30:16,120 --> 00:30:16,960
Speaker 3: There's a third reason.

668
00:30:17,520 --> 00:30:20,520
Speaker 2: So then why would you ever have your money in

669
00:30:20,560 --> 00:30:23,479
Speaker 2: a bank or like buy something like safe like government

670
00:30:23,480 --> 00:30:26,800
Speaker 2: bonds you can sell really quickly, right, Why would you

671
00:30:26,880 --> 00:30:31,719
Speaker 2: ever want that? And the reason why is something called liquidity?

672
00:30:32,320 --> 00:30:34,200
Speaker 3: Right. You want to be able to spend the money, yes,

673
00:30:34,360 --> 00:30:36,600
Speaker 3: rather than wait thirty years for it to get paid back.

674
00:30:36,800 --> 00:30:37,080
Speaker 5: Yes.

675
00:30:37,200 --> 00:30:40,280
Speaker 2: Liquidity is just how easy is it to turn whatever

676
00:30:40,320 --> 00:30:41,240
Speaker 2: you own into cash?

677
00:30:41,400 --> 00:30:43,480
Speaker 3: Right? For real money? Because most of it we're talking

678
00:30:43,520 --> 00:30:46,640
Speaker 3: about is not money, it's the idea of money.

679
00:30:46,760 --> 00:30:50,920
Speaker 2: Yes, So liquidity is literally it's the burger test, Right,

680
00:30:50,960 --> 00:30:52,440
Speaker 2: can you buy a burger with this?

681
00:30:52,680 --> 00:30:53,440
Speaker 3: Can I eat this?

682
00:30:54,360 --> 00:30:56,760
Speaker 2: Money? Is like the most liquid asset, right, because you

683
00:30:56,800 --> 00:30:58,479
Speaker 2: can you can? You can turn this into a burger.

684
00:30:58,600 --> 00:31:00,480
Speaker 3: Right. So liquidity is the only part of this that's

685
00:31:00,480 --> 00:31:02,360
Speaker 3: actually money. Everything else is not money.

686
00:31:02,800 --> 00:31:05,840
Speaker 2: Yeah. Well, liquidity is the measure of how money is it?

687
00:31:06,040 --> 00:31:09,120
Speaker 2: Basically like how easy is it to turn this into burger.

688
00:31:09,400 --> 00:31:14,320
Speaker 3: Is this a special vehicle securitization that's not real, Mia.

689
00:31:14,800 --> 00:31:18,120
Speaker 2: No, it's fake as shit. Right, this is not that complicated,

690
00:31:18,280 --> 00:31:20,640
Speaker 2: right if you if it's like like you can you

691
00:31:20,640 --> 00:31:23,640
Speaker 2: can buy a burger with ten dollars, Yeah, right, that's liquid.

692
00:31:23,680 --> 00:31:25,320
Speaker 3: Actually you kind of can't these days.

693
00:31:25,720 --> 00:31:25,960
Speaker 4: I know.

694
00:31:26,120 --> 00:31:32,880
Speaker 2: I look, I look, I imagine a world where you

695
00:31:32,880 --> 00:31:34,520
Speaker 2: can buy a burger for ten dollars.

696
00:31:35,680 --> 00:31:37,120
Speaker 3: Imagine imagine a burger.

697
00:31:36,880 --> 00:31:39,000
Speaker 4: Yes, imagine a burger that's purchasable.

698
00:31:39,560 --> 00:31:43,120
Speaker 2: Now, what you can't buy a burger with is like

699
00:31:43,360 --> 00:31:47,040
Speaker 2: the ten bucks that a guy you work with owes

700
00:31:47,080 --> 00:31:48,400
Speaker 2: you for buying him a burger.

701
00:31:48,640 --> 00:31:50,160
Speaker 3: Depends on how well you know the burger guy.

702
00:31:50,920 --> 00:31:55,640
Speaker 2: Yeah, but that's that's where things get bad. Yeah, right now,

703
00:31:55,720 --> 00:31:57,720
Speaker 2: the thing is right, right, So the ten bucks the

704
00:31:57,720 --> 00:32:01,760
Speaker 2: guy you work with, like you not liquid. You don't

705
00:32:01,760 --> 00:32:03,360
Speaker 2: have the money in your hands, and if you want

706
00:32:03,400 --> 00:32:05,680
Speaker 2: to get it from him, you have to like go

707
00:32:05,800 --> 00:32:07,520
Speaker 2: ask him for the money, and maybe he has ten

708
00:32:07,560 --> 00:32:09,720
Speaker 2: bucks and maybe he doesn't, right, at which point you

709
00:32:09,760 --> 00:32:12,480
Speaker 2: can't get your ten dollars back until he has the money.

710
00:32:12,720 --> 00:32:15,440
Speaker 3: That but then ten dollars that I'm theoretically owed is

711
00:32:15,440 --> 00:32:19,920
Speaker 3: an asset, though I have not a debt. Yes, okay, yes,

712
00:32:20,640 --> 00:32:21,400
Speaker 3: that's stupid.

713
00:32:21,520 --> 00:32:24,760
Speaker 2: Now loans loans are not liquid assets, right, And they're

714
00:32:24,760 --> 00:32:26,560
Speaker 2: not liquid assets because you can't get the money back

715
00:32:26,720 --> 00:32:27,440
Speaker 2: like immediately.

716
00:32:27,680 --> 00:32:29,560
Speaker 3: So I don't have ten dollars I can spend, but

717
00:32:29,640 --> 00:32:32,120
Speaker 3: on paper, I do have ten theoretical dollars.

718
00:32:32,400 --> 00:32:34,320
Speaker 2: Yeah, right. And this is also like most of what

719
00:32:34,400 --> 00:32:37,120
Speaker 2: billionaire money is, hey, correct, Like most of their money

720
00:32:37,160 --> 00:32:39,640
Speaker 2: is like in like a stock or some shit or

721
00:32:39,720 --> 00:32:41,560
Speaker 2: like it's weird fake money.

722
00:32:41,360 --> 00:32:43,640
Speaker 3: Like theoretically they could access this amount of money, but

723
00:32:43,640 --> 00:32:45,600
Speaker 3: they don't have it. Yeah, it's not real.

724
00:32:45,640 --> 00:32:48,520
Speaker 2: Now okay, but there is this question, so why why

725
00:32:48,520 --> 00:32:50,400
Speaker 2: would you keep your money in fake money instead of

726
00:32:50,440 --> 00:32:53,480
Speaker 2: real money? And the answer is that it gives you

727
00:32:53,520 --> 00:32:56,959
Speaker 2: more money back because say you're an asshole, right, and

728
00:32:57,000 --> 00:33:00,200
Speaker 2: you're charging interest on your coworker for that burg.

729
00:33:00,440 --> 00:33:02,600
Speaker 3: Right, So that ten dollars is actually worth more than

730
00:33:02,600 --> 00:33:05,160
Speaker 3: ten dollars money. So the ten dollars that I don't

731
00:33:05,200 --> 00:33:07,480
Speaker 3: have is theoretically worth well.

732
00:33:07,440 --> 00:33:09,920
Speaker 4: You're worth more. Yeah, it's worth more than the money

733
00:33:09,960 --> 00:33:10,440
Speaker 4: that you do have.

734
00:33:10,520 --> 00:33:12,640
Speaker 3: I can get cheese on the burger, yes.

735
00:33:13,400 --> 00:33:17,440
Speaker 2: Right, And this is this is like the fundamental thing

736
00:33:17,480 --> 00:33:19,600
Speaker 2: of the banking system. Like one of them is that

737
00:33:19,680 --> 00:33:22,640
Speaker 2: ill liquid assets or like assets that you that aren't

738
00:33:22,760 --> 00:33:24,880
Speaker 2: money are worth more than money.

739
00:33:25,600 --> 00:33:27,960
Speaker 3: I guess like when I put a small amount of

740
00:33:28,040 --> 00:33:31,600
Speaker 3: my savings into a CD, that's what I'm doing, except

741
00:33:31,680 --> 00:33:35,920
Speaker 3: normal style they're doing it weird. Yeah, basically because that's

742
00:33:35,960 --> 00:33:38,760
Speaker 3: like an I liquid asset that I'm I'm I'm trading

743
00:33:38,760 --> 00:33:42,040
Speaker 3: the ability to access that liquidity for the potential of

744
00:33:42,040 --> 00:33:42,680
Speaker 3: more money later.

745
00:33:42,680 --> 00:33:44,120
Speaker 2: Wait, so when you say do you mean like a

746
00:33:44,240 --> 00:33:46,080
Speaker 2: like a physical like a disc, like a CD.

747
00:33:46,520 --> 00:33:48,960
Speaker 3: No, a CD like at the bank, Like yeah, yeah,

748
00:33:49,120 --> 00:33:50,600
Speaker 3: like the investment product.

749
00:33:50,960 --> 00:33:52,280
Speaker 4: Yeah sure, yeah, yes, Sorry.

750
00:33:52,320 --> 00:33:54,960
Speaker 3: I was like, no, I'm not talking about buying compact disc.

751
00:33:55,240 --> 00:33:57,120
Speaker 4: I would just leave at five am.

752
00:33:57,160 --> 00:34:00,080
Speaker 3: This time. It's investing me I ever heard of?

753
00:34:00,360 --> 00:34:02,600
Speaker 4: Wow, there's actually a.

754
00:34:02,520 --> 00:34:06,040
Speaker 2: Really an annoying thing researching this episode because there's like,

755
00:34:06,240 --> 00:34:09,040
Speaker 2: so CDOs are like a type of loan that we'll

756
00:34:09,080 --> 00:34:10,520
Speaker 2: kind of get you in a bit. But there's also

757
00:34:10,600 --> 00:34:14,640
Speaker 2: a tech position called cdo. It's like chief something.

758
00:34:14,239 --> 00:34:16,240
Speaker 3: Officer, stookie officer who cares.

759
00:34:16,360 --> 00:34:18,440
Speaker 2: Yeah, whatever the fuck, right, But like when you're trying

760
00:34:18,440 --> 00:34:22,120
Speaker 2: to search for stuff. That's like about CDOs, right, the

761
00:34:22,160 --> 00:34:24,759
Speaker 2: other one keeps coming up. I hate it.

762
00:34:25,560 --> 00:34:28,840
Speaker 4: Okay, okay, locking in, locking in, right, lock and load.

763
00:34:29,120 --> 00:34:31,799
Speaker 2: Now, what if you both want into more money and

764
00:34:32,000 --> 00:34:33,560
Speaker 2: also the ability to buy a burger?

765
00:34:34,000 --> 00:34:37,440
Speaker 3: I guess I would uh probably break one of Carl's fingers.

766
00:34:38,080 --> 00:34:40,120
Speaker 3: This is the guy that owes me the ten dollars, Carl.

767
00:34:40,440 --> 00:34:44,279
Speaker 2: Yeah, but even then it's hard to even that's like,

768
00:34:44,840 --> 00:34:46,280
Speaker 2: this is too hard for these people.

769
00:34:46,400 --> 00:34:48,359
Speaker 3: I would go to Carl's house and kick him out

770
00:34:48,360 --> 00:34:48,560
Speaker 3: of it.

771
00:34:49,080 --> 00:34:51,600
Speaker 2: Well. Yeah, but the other thing is like, you are

772
00:34:51,640 --> 00:34:54,960
Speaker 2: not very rich, okay these people. If you are really

773
00:34:55,400 --> 00:34:58,200
Speaker 2: really rich, I am talking like billionaires, maybe like high

774
00:34:58,239 --> 00:34:59,720
Speaker 2: high class multimillionaires.

775
00:35:00,239 --> 00:35:02,120
Speaker 4: Well, you can go to a shadow bank.

776
00:35:02,760 --> 00:35:05,719
Speaker 3: Oh right, you can get a loan based on the loan.

777
00:35:06,239 --> 00:35:08,480
Speaker 2: No, well you're saying, so the thing is that you

778
00:35:08,600 --> 00:35:12,160
Speaker 2: have money, right, but you want to turn your money

779
00:35:12,200 --> 00:35:15,480
Speaker 2: into more money, like you have like an actual cash right,

780
00:35:15,560 --> 00:35:18,680
Speaker 2: like you are you are, for example, a pension fund. No,

781
00:35:19,360 --> 00:35:22,880
Speaker 2: you have a shit ton of cash. Or imagine imagine

782
00:35:22,880 --> 00:35:23,560
Speaker 2: a pension fund.

783
00:35:23,640 --> 00:35:23,759
Speaker 3: Right.

784
00:35:24,080 --> 00:35:26,480
Speaker 2: This is okay. This is also really hard because it

785
00:35:26,560 --> 00:35:28,840
Speaker 2: used to be easier to explain this because like we

786
00:35:28,960 --> 00:35:30,640
Speaker 2: used to live in a world where people had pension

787
00:35:30,640 --> 00:35:33,600
Speaker 2: funds and had mortgages, and now we no longer have

788
00:35:33,680 --> 00:35:35,120
Speaker 2: pension funds or mortgages.

789
00:35:36,080 --> 00:35:38,040
Speaker 3: I live in an apartment, and I will always live

790
00:35:38,040 --> 00:35:38,720
Speaker 3: in an apartment.

791
00:35:39,360 --> 00:35:42,120
Speaker 2: Yeah, no, and so still okay, So like imagine imagine

792
00:35:42,120 --> 00:35:44,839
Speaker 2: a pension fund, right, you you have a shit ton

793
00:35:44,880 --> 00:35:47,520
Speaker 2: of money from your members paying into the fund, but

794
00:35:47,560 --> 00:35:48,440
Speaker 2: it's cash.

795
00:35:48,760 --> 00:35:50,880
Speaker 4: You need to turn that cash into more money.

796
00:35:50,920 --> 00:35:54,040
Speaker 2: But also you're a pension fund, so you constantly have

797
00:35:54,120 --> 00:35:56,600
Speaker 2: to take money back out in order to pay the

798
00:35:56,600 --> 00:35:58,920
Speaker 2: people who are retiring to pay old rifle.

799
00:35:59,000 --> 00:35:59,560
Speaker 4: Yeah.

800
00:35:59,760 --> 00:36:01,120
Speaker 2: And this is also a thing that like, you know,

801
00:36:01,120 --> 00:36:03,200
Speaker 2: if you're just like a rich person, sometimes you want

802
00:36:03,200 --> 00:36:04,880
Speaker 2: your a lot of times you want your money in

803
00:36:04,960 --> 00:36:08,319
Speaker 2: assets that are like you can you can turn back

804
00:36:08,320 --> 00:36:10,160
Speaker 2: into real money, but also make you wish a ton

805
00:36:10,239 --> 00:36:11,359
Speaker 2: of money. Right.

806
00:36:11,360 --> 00:36:13,239
Speaker 3: They need to sort of revolve a little bit theyd

807
00:36:13,360 --> 00:36:16,239
Speaker 3: be like yeah, I don't know, like a jello like

808
00:36:16,320 --> 00:36:17,200
Speaker 3: partially liquid.

809
00:36:17,480 --> 00:36:21,200
Speaker 2: Yeah, and this is this is what the shadow banks do, right,

810
00:36:21,239 --> 00:36:23,680
Speaker 2: because the thing that you can buy is one of

811
00:36:23,719 --> 00:36:27,160
Speaker 2: those mortgages they've turned into like a security. Right, you

812
00:36:27,200 --> 00:36:30,239
Speaker 2: can go buy someone else's debt huh. But because it's

813
00:36:30,239 --> 00:36:33,560
Speaker 2: a magic security now. And these are called mortgage backed securities.

814
00:36:33,600 --> 00:36:36,360
Speaker 2: And again, if you're to remember, yeah, anything about anything

815
00:36:36,400 --> 00:36:38,160
Speaker 2: about two thousand and eight, that's what blew up the

816
00:36:38,160 --> 00:36:40,520
Speaker 2: whole economy, is these mortgage back securities.

817
00:36:40,640 --> 00:36:42,960
Speaker 3: Yeah, I've heard of that because it was bad, yep,

818
00:36:43,440 --> 00:36:45,719
Speaker 3: terrible idea. And so we're still doing that.

819
00:36:46,120 --> 00:36:50,360
Speaker 2: Oh yeah, it's good. Cool, I mean it's less specifically,

820
00:36:50,440 --> 00:36:52,600
Speaker 2: the mortgage back ones are less bad. So they started

821
00:36:52,600 --> 00:36:58,160
Speaker 2: doing it with like commercial retail loans, which is incredible, great,

822
00:36:58,560 --> 00:37:01,560
Speaker 2: so that's really fun. They're also doing with other unhidd

823
00:37:01,600 --> 00:37:04,239
Speaker 2: shit that we're gonna do like next episode. And what

824
00:37:04,280 --> 00:37:07,040
Speaker 2: these people are really buying aren't just these like you're

825
00:37:07,040 --> 00:37:09,279
Speaker 2: not buying like one person's mortgage, right right.

826
00:37:09,320 --> 00:37:10,880
Speaker 3: They're like pooled and like bundled.

827
00:37:11,480 --> 00:37:12,359
Speaker 4: Yeah, yeah, they.

828
00:37:12,400 --> 00:37:14,640
Speaker 2: Like they bundle them all together, and then you you

829
00:37:14,680 --> 00:37:17,920
Speaker 2: buy the rights to a percentage of the pool.

830
00:37:18,440 --> 00:37:20,759
Speaker 3: It's not like when you sponsor like an elephant in

831
00:37:20,800 --> 00:37:22,520
Speaker 3: Africa or something, and they send you a picture of

832
00:37:22,520 --> 00:37:24,520
Speaker 3: like a specific element, or they don't send you They

833
00:37:24,520 --> 00:37:26,799
Speaker 3: doesnt't to do a picture of the family you're arming. No,

834
00:37:27,840 --> 00:37:29,680
Speaker 3: these are the Joneses you own their fucking house.

835
00:37:29,760 --> 00:37:31,879
Speaker 4: Yeah, it's it's it's it's it's a it's a shit show.

836
00:37:32,480 --> 00:37:34,680
Speaker 2: No, well, I mean eventually you might have to go

837
00:37:34,680 --> 00:37:37,160
Speaker 2: figure out who that is because you like own whatever

838
00:37:37,200 --> 00:37:40,960
Speaker 2: the fuck percentage of like the mortgages or whatever. But like, okay,

839
00:37:41,400 --> 00:37:44,760
Speaker 2: so these are these are just like someone else's debt

840
00:37:44,920 --> 00:37:47,839
Speaker 2: that you're buying, and that the people who can do

841
00:37:47,880 --> 00:37:50,960
Speaker 2: this are you know, people who have billions of dollars.

842
00:37:50,960 --> 00:37:52,560
Speaker 2: It's not you, the listener. And by the way, if

843
00:37:52,600 --> 00:37:54,600
Speaker 2: you the listener have billions of dollars lying around for

844
00:37:54,640 --> 00:37:55,440
Speaker 2: some reason.

845
00:37:55,360 --> 00:37:56,680
Speaker 3: Can I have some please?

846
00:37:56,800 --> 00:37:58,319
Speaker 4: Yes, please, please.

847
00:37:58,040 --> 00:38:00,200
Speaker 2: Give me some of them so I can house like

848
00:38:00,280 --> 00:38:03,400
Speaker 2: literally every trans woman and like transperson, I can. I

849
00:38:03,440 --> 00:38:05,400
Speaker 2: can do it, Like, please give me your billions of

850
00:38:05,440 --> 00:38:07,400
Speaker 2: dollars so I can I can achieve this goal. But

851
00:38:07,480 --> 00:38:09,960
Speaker 2: like we're talking about you know, like like the Pension

852
00:38:09,960 --> 00:38:12,960
Speaker 2: Fund of California, We're talking about mega corporations, insurance companies,

853
00:38:13,000 --> 00:38:14,719
Speaker 2: the kinds of things I can actually buy these.

854
00:38:14,560 --> 00:38:18,560
Speaker 4: Like you know. Now, this is where we get to

855
00:38:18,680 --> 00:38:20,440
Speaker 4: one of the other problems, which is that.

856
00:38:20,760 --> 00:38:21,800
Speaker 2: These things are not insured.

857
00:38:22,800 --> 00:38:25,200
Speaker 4: So yeah, what do you.

858
00:38:25,719 --> 00:38:28,920
Speaker 2: Do in order to try to make it less risky.

859
00:38:28,960 --> 00:38:31,280
Speaker 2: What do you get if you can't pay the loan back?

860
00:38:31,760 --> 00:38:33,279
Speaker 2: And this is what's called collateral.

861
00:38:33,360 --> 00:38:34,840
Speaker 3: I don't know, swift punch of the nuts.

862
00:38:35,120 --> 00:38:38,440
Speaker 2: Oh no, they take your house, right, Yes, that's supposed

863
00:38:38,480 --> 00:38:40,799
Speaker 2: to be the thing, so okay. The way that like

864
00:38:40,880 --> 00:38:45,640
Speaker 2: shadow banking loans tend to work is that they they

865
00:38:45,640 --> 00:38:48,919
Speaker 2: have collateral, right, so you you give them something or

866
00:38:49,160 --> 00:38:52,719
Speaker 2: or it's either you give them something directly or it's

867
00:38:52,760 --> 00:38:54,560
Speaker 2: like if you promise to give them the thing.

868
00:38:54,719 --> 00:38:57,439
Speaker 4: Yeah, and giving it to them directly is.

869
00:38:57,400 --> 00:38:59,400
Speaker 2: Like a repo market thing. We're not really going to

870
00:38:59,440 --> 00:39:02,200
Speaker 2: get into those right now, but this does. That's like,

871
00:39:02,239 --> 00:39:05,480
Speaker 2: that's also a kind of shadow bank. But there's a problem, right,

872
00:39:05,600 --> 00:39:08,440
Speaker 2: which is what if the thing that you're paying, you're

873
00:39:08,480 --> 00:39:11,280
Speaker 2: paying as collateral, Like what if your house becomes worthless?

874
00:39:11,960 --> 00:39:14,160
Speaker 2: And what if what if Molly.

875
00:39:14,040 --> 00:39:17,040
Speaker 3: And it's completely uninsured and there's no way to fix

876
00:39:17,080 --> 00:39:18,720
Speaker 3: it because I don't even have anything to give.

877
00:39:18,600 --> 00:39:23,200
Speaker 2: You now now, Molly, what if And this is purely hypothetical,

878
00:39:23,400 --> 00:39:25,560
Speaker 2: it could never happen in the real world, Molly, But

879
00:39:25,680 --> 00:39:30,920
Speaker 2: what if somehow someone someone decided to use the same

880
00:39:31,200 --> 00:39:35,319
Speaker 2: house as collateral for multiple different securities.

881
00:39:35,600 --> 00:39:36,800
Speaker 3: Well, that could never go wrong.

882
00:39:37,160 --> 00:39:40,080
Speaker 2: What if, Mollie, they made a word for this that

883
00:39:40,239 --> 00:39:42,719
Speaker 2: is so complicated, I am not going to attempt to

884
00:39:42,719 --> 00:39:45,200
Speaker 2: read it on the show. What if, Molly, what.

885
00:39:45,239 --> 00:39:46,200
Speaker 3: Is it in German or something?

886
00:39:46,280 --> 00:39:48,279
Speaker 4: No, it's like it's just like this, It's like the

887
00:39:48,440 --> 00:39:50,480
Speaker 4: it's like the length of my head. It's like hyper

888
00:39:50,880 --> 00:39:54,560
Speaker 4: hyper something bullshit. Like I refuse to say it because

889
00:39:54,719 --> 00:39:55,319
Speaker 4: it is just.

890
00:39:55,239 --> 00:39:59,200
Speaker 2: Like a completely like financed goal bullshit term they made up.

891
00:39:59,600 --> 00:40:02,920
Speaker 3: So but the point of the point of collateral is

892
00:40:02,960 --> 00:40:06,120
Speaker 3: that you can use it to pay off the loan

893
00:40:06,239 --> 00:40:09,359
Speaker 3: if you default one. And so that literally won't work

894
00:40:09,440 --> 00:40:12,839
Speaker 3: more than once because once I eat the burger, Once

895
00:40:12,880 --> 00:40:14,080
Speaker 3: I eat the burger, it's bond.

896
00:40:14,520 --> 00:40:16,960
Speaker 2: Yep. And this is one of the things that happened

897
00:40:17,000 --> 00:40:17,759
Speaker 2: in two thousand years.

898
00:40:17,800 --> 00:40:21,560
Speaker 3: I can't promise I can't promise ten guys my burger now, Molly.

899
00:40:21,760 --> 00:40:24,720
Speaker 2: Here's the amazing thing here, right, because but the advantage

900
00:40:24,760 --> 00:40:27,000
Speaker 2: for these companies, right is like, if you're the bank

901
00:40:27,040 --> 00:40:29,160
Speaker 2: that has the mortgage, suddenly you can spin your mortgage

902
00:40:29,160 --> 00:40:31,520
Speaker 2: off into like multiple securities that you can sell.

903
00:40:31,600 --> 00:40:34,080
Speaker 3: Right, It's worth ten times more and that's great for you.

904
00:40:34,239 --> 00:40:40,239
Speaker 2: Yes, and comma, comma. We we haven't even Okay, I

905
00:40:40,800 --> 00:40:42,399
Speaker 2: just I just described to the sister where these people

906
00:40:42,440 --> 00:40:45,080
Speaker 2: are promising the same house to most old people. This

907
00:40:45,239 --> 00:40:49,399
Speaker 2: isn't even the extremely unfathomably reckless ingredy ships. No it is,

908
00:40:49,800 --> 00:40:52,160
Speaker 2: Oh it is, but it's not the worst of it.

909
00:40:52,360 --> 00:40:59,000
Speaker 3: Oh good?

910
00:41:03,520 --> 00:41:05,640
Speaker 2: Okay, So do you remember that quote from when I

911
00:41:05,680 --> 00:41:08,560
Speaker 2: was giving the first definition of shadow banking? Right, Like,

912
00:41:08,600 --> 00:41:12,560
Speaker 2: I gave this quote from the guy who invented the

913
00:41:12,680 --> 00:41:16,120
Speaker 2: term where he called it quote the whole alphabet soup

914
00:41:16,160 --> 00:41:20,160
Speaker 2: of leveraged up investment, conduits, vehicles, and structures. Right, So

915
00:41:20,320 --> 00:41:23,000
Speaker 2: we've kind of talked about the conduits, vehicles and structures, right,

916
00:41:23,000 --> 00:41:25,080
Speaker 2: those are all of the shadow banks that like make

917
00:41:25,120 --> 00:41:25,560
Speaker 2: the things, right.

918
00:41:25,880 --> 00:41:29,319
Speaker 3: I love the conduits, vehicles, and structures. Yeah, all the acronyms.

919
00:41:29,760 --> 00:41:31,879
Speaker 4: But what does leveraged up mean?

920
00:41:32,640 --> 00:41:32,879
Speaker 2: Now?

921
00:41:33,440 --> 00:41:33,760
Speaker 4: Okay?

922
00:41:34,000 --> 00:41:37,080
Speaker 2: In this case, it means that a bunch of these

923
00:41:37,120 --> 00:41:41,200
Speaker 2: banks have taken out a shit ton of like risky,

924
00:41:41,320 --> 00:41:43,839
Speaker 2: high interest loans in order to buy more of these

925
00:41:43,920 --> 00:41:46,719
Speaker 2: fucking mortgages because they think they can make more money

926
00:41:46,760 --> 00:41:47,120
Speaker 2: off of it.

927
00:41:47,320 --> 00:41:50,800
Speaker 3: So they took out they took out loans to buy

928
00:41:50,920 --> 00:41:54,000
Speaker 3: these unsecured securities.

929
00:41:54,320 --> 00:41:57,160
Speaker 4: The regular ass banks were doing this.

930
00:41:57,640 --> 00:42:01,279
Speaker 2: Yeah, they they went into debt to buy more of

931
00:42:01,320 --> 00:42:02,440
Speaker 2: these shitty mortgages.

932
00:42:02,680 --> 00:42:07,200
Speaker 3: So they took out loans to buy what are essentially unsecured.

933
00:42:06,640 --> 00:42:09,600
Speaker 4: Loves yep, because I thought it would make them more money.

934
00:42:09,640 --> 00:42:15,480
Speaker 3: But there's no money involved. Money.

935
00:42:15,600 --> 00:42:18,200
Speaker 2: It is about to get so much worse, right, so

936
00:42:18,239 --> 00:42:21,120
Speaker 2: I okay, So sticking with leveraging for a second. Right,

937
00:42:21,719 --> 00:42:24,640
Speaker 2: you might have actually heard of something called a leveraged buyout.

938
00:42:25,080 --> 00:42:27,920
Speaker 3: I have heard those words, and then I stopped listening.

939
00:42:28,160 --> 00:42:29,000
Speaker 4: Yeah, so shere's the thing.

940
00:42:29,320 --> 00:42:31,719
Speaker 2: Leverage buyouts are something that actually happens in the real

941
00:42:31,760 --> 00:42:34,719
Speaker 2: world that does fuck you directly, which is a whole

942
00:42:34,719 --> 00:42:37,520
Speaker 2: bunch of companies that used to be like normalized companies

943
00:42:37,920 --> 00:42:40,279
Speaker 2: like died because venture capital firms, you, by the way,

944
00:42:40,280 --> 00:42:44,120
Speaker 2: are also shadow banks. Oh did this right? They came

945
00:42:44,160 --> 00:42:47,200
Speaker 2: in tactically speaking, they did it through like risky bond purchases,

946
00:42:47,200 --> 00:42:49,240
Speaker 2: but basically they did a bunch of high interest loans

947
00:42:49,680 --> 00:42:51,359
Speaker 2: and then they go buy a company.

948
00:42:51,080 --> 00:42:52,839
Speaker 3: And then they like strip it for parts, and.

949
00:42:52,760 --> 00:42:55,000
Speaker 2: Then they try to raise the stock price of the company. Yeah,

950
00:42:55,040 --> 00:42:58,160
Speaker 2: and then the river parts sell everything and get out right,

951
00:42:58,280 --> 00:43:00,759
Speaker 2: that's what a leverage buyout is. These people are sort

952
00:43:00,760 --> 00:43:02,759
Speaker 2: of are doing kind of a version of that, but

953
00:43:02,880 --> 00:43:05,319
Speaker 2: like they're they're taking on this debt in order to

954
00:43:05,360 --> 00:43:08,480
Speaker 2: like buy fucking shitty underwater mortgages.

955
00:43:10,080 --> 00:43:12,200
Speaker 4: Because they look like they're making so much money.

956
00:43:12,400 --> 00:43:16,080
Speaker 3: They're taking on real debt to buy hypothetical debt.

957
00:43:16,360 --> 00:43:19,440
Speaker 4: Oh, it's about to get so much worse.

958
00:43:19,800 --> 00:43:22,640
Speaker 3: That doesn't seem like a good idea, so not to.

959
00:43:22,640 --> 00:43:26,160
Speaker 4: Get so much worse. So that's what like the leveraged

960
00:43:26,239 --> 00:43:26,799
Speaker 4: part of that.

961
00:43:27,040 --> 00:43:28,759
Speaker 3: I don't even know how you do that in burgers,

962
00:43:29,520 --> 00:43:30,480
Speaker 3: I don't know.

963
00:43:31,680 --> 00:43:34,880
Speaker 2: You're going into debt to like buy the promise of

964
00:43:34,920 --> 00:43:38,200
Speaker 2: burgers in the future so you can sell those future burgers.

965
00:43:38,320 --> 00:43:40,799
Speaker 3: Yeah, but burgers are real. The thing we're not talking

966
00:43:40,800 --> 00:43:41,879
Speaker 3: about a real thing at all.

967
00:43:42,400 --> 00:43:45,319
Speaker 2: Well, they're technically, technically speaking. Somewhere at the bottom of

968
00:43:45,320 --> 00:43:47,960
Speaker 2: this is mortgages. However, Comma, we're about to get into

969
00:43:48,000 --> 00:43:50,319
Speaker 2: a kind of asset where there isn't anything behind it.

970
00:43:50,840 --> 00:43:51,640
Speaker 2: This is where.

971
00:43:51,440 --> 00:43:56,040
Speaker 4: The really really truly unhing shit starts.

972
00:43:56,160 --> 00:43:58,600
Speaker 2: It hasn't, which is that these companies figured out a

973
00:43:58,640 --> 00:44:02,360
Speaker 2: way to bet on whether these mortgages were going to

974
00:44:02,360 --> 00:44:02,920
Speaker 2: fail or not.

975
00:44:03,120 --> 00:44:06,920
Speaker 3: That's so tight, Mia, I fucking love that. I love it.

976
00:44:07,040 --> 00:44:10,960
Speaker 4: Yes, yeah, By the way, I kindatsize enough. How how unhinge?

977
00:44:11,000 --> 00:44:14,680
Speaker 2: This is the mechanism they're using to do this is

978
00:44:14,719 --> 00:44:16,280
Speaker 2: called a credit default swap.

979
00:44:16,480 --> 00:44:17,600
Speaker 3: Oh, I've heard that phrase.

980
00:44:18,000 --> 00:44:20,879
Speaker 2: This was supposed to be how they did insurance. Their

981
00:44:20,920 --> 00:44:23,720
Speaker 2: mechanism for doing insurance on all of these insane loans

982
00:44:23,719 --> 00:44:27,320
Speaker 2: they were doing was originally like, Okay, I'm gonna you're

983
00:44:27,640 --> 00:44:29,480
Speaker 2: I don't know. So you have a you have a bank, right,

984
00:44:29,520 --> 00:44:32,200
Speaker 2: the bank has given out a risky loan. So this

985
00:44:32,280 --> 00:44:34,480
Speaker 2: bank goes to another bank they shouldn't do that, and

986
00:44:34,520 --> 00:44:37,440
Speaker 2: they say, hey, if this person actually pays the loan back,

987
00:44:37,520 --> 00:44:38,440
Speaker 2: I will pay you money.

988
00:44:38,880 --> 00:44:40,680
Speaker 3: Okay, so the other so the other bank is like

989
00:44:40,960 --> 00:44:42,000
Speaker 3: taking a gamble here.

990
00:44:42,360 --> 00:44:42,520
Speaker 1: Yeah.

991
00:44:42,640 --> 00:44:45,680
Speaker 2: So so the other bank that's giving out the loan

992
00:44:45,880 --> 00:44:48,600
Speaker 2: right gets money if the loan goes under, So in

993
00:44:48,680 --> 00:44:51,080
Speaker 2: theory they're sort of like insured against the risk.

994
00:44:51,160 --> 00:44:52,560
Speaker 4: They call it like hedging.

995
00:44:52,680 --> 00:44:54,799
Speaker 2: There like so likes like So theoretically it's less bad

996
00:44:54,840 --> 00:44:56,919
Speaker 2: from them because now even if the loan goes under,

997
00:44:57,000 --> 00:44:59,160
Speaker 2: they still get money back from that other bank. So

998
00:44:59,200 --> 00:45:02,719
Speaker 2: the other bank is just bookie yeah, and the other

999
00:45:02,760 --> 00:45:05,480
Speaker 2: bank is betting that they are going to get it,

1000
00:45:05,680 --> 00:45:09,040
Speaker 2: so then and if the loan does get paid, then

1001
00:45:09,040 --> 00:45:10,040
Speaker 2: that bank makes money.

1002
00:45:10,160 --> 00:45:13,279
Speaker 3: And this is legal for everyone to do. Yep, this

1003
00:45:13,360 --> 00:45:15,520
Speaker 3: is real banking or shadow bank. This is real bank.

1004
00:45:16,120 --> 00:45:20,080
Speaker 2: Didn't know this is technically actually.

1005
00:45:19,760 --> 00:45:22,040
Speaker 4: No, this is actually both both of them do this.

1006
00:45:22,440 --> 00:45:25,440
Speaker 2: Technically speaking, the instrument like like the actual like credit

1007
00:45:25,440 --> 00:45:27,680
Speaker 2: default swap or whatever, is made by the shadow banks,

1008
00:45:27,680 --> 00:45:29,520
Speaker 2: but then they're brought by the regular banks.

1009
00:45:29,600 --> 00:45:32,080
Speaker 3: I'm starting to think that the bank starts the shadow

1010
00:45:32,080 --> 00:45:34,840
Speaker 3: banks and then all of this is just fake and bad.

1011
00:45:35,360 --> 00:45:36,200
Speaker 4: Like so here's the thing.

1012
00:45:36,200 --> 00:45:38,480
Speaker 2: Here's the thing about these systems, right, is that, like

1013
00:45:38,520 --> 00:45:40,800
Speaker 2: a lot of the original literature on it was considering

1014
00:45:40,840 --> 00:45:43,560
Speaker 2: them separate. But it's like no, like the regular banks

1015
00:45:43,560 --> 00:45:45,520
Speaker 2: are making their own shadow banks do these things. They're

1016
00:45:45,520 --> 00:45:48,279
Speaker 2: all involved in these assets. They're also investing in the

1017
00:45:48,280 --> 00:45:50,640
Speaker 2: shadow banks, which is the problem we're having right now.

1018
00:45:50,880 --> 00:45:52,919
Speaker 3: It's like it's the same guy. He just like turns

1019
00:45:52,960 --> 00:45:54,680
Speaker 3: his chair around at his desk and he's like, now

1020
00:45:54,760 --> 00:45:55,840
Speaker 3: I'm shadow bank Todd.

1021
00:45:56,040 --> 00:46:00,160
Speaker 2: Yeah. Well, and sometimes it's that sometimes they're legitimately is

1022
00:46:00,200 --> 00:46:02,840
Speaker 2: other entities they work with, but yeah, but there's still.

1023
00:46:02,640 --> 00:46:04,920
Speaker 3: It's still a bank engaging. So it's like all these

1024
00:46:04,920 --> 00:46:07,239
Speaker 3: are non banking practices. Yeah, but the bank is doing

1025
00:46:07,239 --> 00:46:07,839
Speaker 3: it well.

1026
00:46:07,880 --> 00:46:08,440
Speaker 4: But here's the thing.

1027
00:46:08,440 --> 00:46:10,440
Speaker 2: The important part for that though, is that like the

1028
00:46:10,480 --> 00:46:13,279
Speaker 2: non bank also can do this with other non banks.

1029
00:46:12,960 --> 00:46:16,680
Speaker 3: Even better even Yeah, right, once we're once we're talking

1030
00:46:16,680 --> 00:46:19,120
Speaker 3: about chadow banking, Like the real bank should not be

1031
00:46:19,120 --> 00:46:21,680
Speaker 3: in the room, like go home, Wells Fargo, you don't

1032
00:46:21,719 --> 00:46:22,800
Speaker 3: belong here, you're drunk.

1033
00:46:23,040 --> 00:46:25,640
Speaker 4: No, but like they're funding all of this, right, If

1034
00:46:25,640 --> 00:46:26,080
Speaker 4: the real.

1035
00:46:25,960 --> 00:46:27,759
Speaker 3: Bank is involved with the shadow banking, that means like

1036
00:46:27,840 --> 00:46:30,279
Speaker 3: I can't opt out of being involved in this because

1037
00:46:30,280 --> 00:46:31,200
Speaker 3: they hit my money.

1038
00:46:31,840 --> 00:46:33,560
Speaker 2: Yeah, you know what we were talking about that at

1039
00:46:33,560 --> 00:46:35,480
Speaker 2: the top that like so some of these like bank

1040
00:46:35,520 --> 00:46:36,960
Speaker 2: banks had to like stop their withdrawals.

1041
00:46:36,960 --> 00:46:38,960
Speaker 4: Oh yeah, one of those, by the way, was JP Morgan.

1042
00:46:39,160 --> 00:46:41,640
Speaker 2: But that's a real bank. Yep. They're involved in the

1043
00:46:41,640 --> 00:46:45,480
Speaker 2: shadow banking shit, so they they are exposed to when

1044
00:46:45,520 --> 00:46:48,000
Speaker 2: they're like fucking seven hundred million dollar loon to like

1045
00:46:48,040 --> 00:46:48,920
Speaker 2: a fucking actually went home.

1046
00:46:48,920 --> 00:46:50,200
Speaker 4: Which one was the seven hundred million.

1047
00:46:50,000 --> 00:46:52,320
Speaker 2: Dollar I think a seven hundred million dollar loan that

1048
00:46:52,360 --> 00:46:55,440
Speaker 2: went under was the one that was to a subprime

1049
00:46:55,600 --> 00:46:56,960
Speaker 2: auto loan company.

1050
00:46:57,360 --> 00:46:58,719
Speaker 3: That's a bad investment.

1051
00:46:58,960 --> 00:47:00,560
Speaker 4: It evil.

1052
00:47:00,880 --> 00:47:04,240
Speaker 3: It's so, why am I trusting all of my money

1053
00:47:04,239 --> 00:47:06,160
Speaker 3: that I have in this world? I'm letting this guy

1054
00:47:06,200 --> 00:47:09,000
Speaker 3: hold on to it, who's obviously not good with fucking money.

1055
00:47:09,840 --> 00:47:11,719
Speaker 2: Well, because the FDIC is ensuring it.

1056
00:47:12,880 --> 00:47:14,440
Speaker 3: Why are you in charge of Why are you in

1057
00:47:14,480 --> 00:47:16,759
Speaker 3: charge of having the money? You obviously don't make great

1058
00:47:16,800 --> 00:47:19,800
Speaker 3: financial decisions because you invested seven hundred million dollars in

1059
00:47:19,880 --> 00:47:21,200
Speaker 3: subprime auto loans.

1060
00:47:22,600 --> 00:47:25,040
Speaker 2: So, Mollie, this, this is the This is the point

1061
00:47:25,040 --> 00:47:27,960
Speaker 2: where we need to bring debt the first five thousand

1062
00:47:28,040 --> 00:47:30,239
Speaker 2: years back into this and emphasize the extent to which

1063
00:47:30,280 --> 00:47:33,600
Speaker 2: the financial class has always been deeply connected to the military,

1064
00:47:34,040 --> 00:47:36,560
Speaker 2: and why has always been deconnected to war financing.

1065
00:47:36,920 --> 00:47:40,000
Speaker 3: I'm starting to realize that this is all very bad.

1066
00:47:40,400 --> 00:47:41,280
Speaker 2: It's very bad.

1067
00:47:41,360 --> 00:47:42,120
Speaker 4: It's all very bad.

1068
00:47:42,160 --> 00:47:44,879
Speaker 2: And this is this is to some extent why right

1069
00:47:44,960 --> 00:47:47,680
Speaker 2: like part part of what right wing conspiracism about the

1070
00:47:47,719 --> 00:47:51,879
Speaker 2: financial system is is that like these people are, like

1071
00:47:51,880 --> 00:47:53,640
Speaker 2: like the right wiggers, like these people are there's like

1072
00:47:53,680 --> 00:47:56,200
Speaker 2: a baseline level of anti semitism, like in the US

1073
00:47:56,400 --> 00:47:58,560
Speaker 2: right because it is a is a Christian society that

1074
00:47:58,680 --> 00:48:02,040
Speaker 2: is just like what fuck happens there? And these people

1075
00:48:02,120 --> 00:48:06,000
Speaker 2: are like, Okay, we can channel all of the anger

1076
00:48:06,120 --> 00:48:08,840
Speaker 2: at like, Oh, my gode By fucking house got stolen

1077
00:48:08,880 --> 00:48:11,960
Speaker 2: by the bank because because they were betting on the

1078
00:48:12,000 --> 00:48:13,120
Speaker 2: mortgage to fail.

1079
00:48:13,480 --> 00:48:15,480
Speaker 3: And I still understand why that's legal.

1080
00:48:16,239 --> 00:48:18,120
Speaker 2: Yeah, well, all of these right wing conspiracies do is

1081
00:48:18,280 --> 00:48:19,640
Speaker 2: they look at that shit and they go, oh, well

1082
00:48:19,640 --> 00:48:21,080
Speaker 2: it was the Jews and it's like but no, like

1083
00:48:21,560 --> 00:48:23,719
Speaker 2: fuck off, like these are all no, it was the

1084
00:48:23,719 --> 00:48:25,360
Speaker 2: band and the other thing. And this is actually a

1085
00:48:25,360 --> 00:48:27,640
Speaker 2: really important thing that's not well understood here is that

1086
00:48:27,719 --> 00:48:30,360
Speaker 2: like the actual people who run these fucking banks and

1087
00:48:30,320 --> 00:48:32,439
Speaker 2: the people who work at them are all fucking white

1088
00:48:32,520 --> 00:48:33,560
Speaker 2: Christian dipshits.

1089
00:48:34,040 --> 00:48:36,879
Speaker 4: This is like a really really like persistent issue.

1090
00:48:36,560 --> 00:48:38,920
Speaker 2: That everyone fucking has, which is that like one of

1091
00:48:38,960 --> 00:48:41,000
Speaker 2: one of the great successes of anti Semitism was like

1092
00:48:41,080 --> 00:48:44,000
Speaker 2: creating the image of the banker as a Jewish person.

1093
00:48:44,040 --> 00:48:46,759
Speaker 2: And no, they're not the bay Like I fucking went

1094
00:48:46,760 --> 00:48:48,200
Speaker 2: to school with these people. They're all a bunch of

1095
00:48:48,280 --> 00:48:51,160
Speaker 2: fucking white frat bros. They're fucking white Christian frat bros.

1096
00:48:51,200 --> 00:48:52,840
Speaker 2: Oh right, you University of Chicago.

1097
00:48:53,000 --> 00:48:55,120
Speaker 3: You have a degree in economics in the University of Chicago.

1098
00:48:55,200 --> 00:48:58,160
Speaker 2: No fact, I have an anthropology degree, Thank you very much.

1099
00:48:58,200 --> 00:49:02,320
Speaker 2: I took a not a fucking fake degree, like the

1100
00:49:02,320 --> 00:49:03,400
Speaker 2: stupid econ bullshit.

1101
00:49:03,560 --> 00:49:06,360
Speaker 3: I would say, that's actually so evil to study economics.

1102
00:49:06,480 --> 00:49:08,239
Speaker 3: It's so hidio Picago, you probably met some of the

1103
00:49:08,239 --> 00:49:09,520
Speaker 3: most evil people.

1104
00:49:09,640 --> 00:49:11,920
Speaker 2: On the most I was just like in a dorm

1105
00:49:11,960 --> 00:49:14,080
Speaker 2: with them. Okay, so but you saw that I know

1106
00:49:14,120 --> 00:49:16,359
Speaker 2: all these people. Yeah, and like it is not it

1107
00:49:16,400 --> 00:49:18,120
Speaker 2: is not a bunch of Jewish people. It's it's a

1108
00:49:18,160 --> 00:49:20,399
Speaker 2: bunch of Christian frat bros. Like that's like the thing

1109
00:49:20,440 --> 00:49:23,560
Speaker 2: that's actually going on. There's actually a whole One day

1110
00:49:23,600 --> 00:49:26,080
Speaker 2: I will write behind the Bastard's episode about leverage buyouts

1111
00:49:26,120 --> 00:49:29,040
Speaker 2: and about how like there was like a Jewish guy

1112
00:49:29,040 --> 00:49:31,759
Speaker 2: who kind of like like did a lot of the

1113
00:49:31,800 --> 00:49:35,000
Speaker 2: inventing stuff, but him breaking into the banking thing was

1114
00:49:35,040 --> 00:49:37,400
Speaker 2: like a whole thing because there was so much anti Semitism,

1115
00:49:37,400 --> 00:49:40,040
Speaker 2: because all of the banking sector was run by all

1116
00:49:40,080 --> 00:49:45,400
Speaker 2: of the fucking like weird dipshit like CIA, like like

1117
00:49:45,719 --> 00:49:46,799
Speaker 2: wasp motherfuckers.

1118
00:49:48,640 --> 00:49:50,560
Speaker 3: I mean, the Mormons have a huge hedge.

1119
00:49:50,280 --> 00:49:52,359
Speaker 2: Fund yep, yep, yep, yep, yep.

1120
00:49:52,440 --> 00:49:53,960
Speaker 3: Yeah, So, like the what is it? I read an

1121
00:49:54,000 --> 00:49:55,880
Speaker 3: article about the Hedge Fund that the Mormons operate like

1122
00:49:56,360 --> 00:49:58,719
Speaker 3: they have their like best and brightest finance bros. Like,

1123
00:49:58,760 --> 00:50:01,239
Speaker 3: you know, Mormons do their to your if you're really

1124
00:50:01,239 --> 00:50:03,920
Speaker 3: good at finance your mission, that you don't have to

1125
00:50:03,960 --> 00:50:05,640
Speaker 3: go to South America and like tell people about the

1126
00:50:05,640 --> 00:50:07,279
Speaker 3: Book of Mormon. You can work at the Hedge Fund

1127
00:50:07,280 --> 00:50:07,880
Speaker 3: as a mission.

1128
00:50:08,040 --> 00:50:08,960
Speaker 4: It's a nightmare.

1129
00:50:09,400 --> 00:50:10,760
Speaker 3: I'm doing a hedge funds for God.

1130
00:50:10,960 --> 00:50:11,200
Speaker 2: Yep.

1131
00:50:11,200 --> 00:50:15,879
Speaker 4: That's ASA's a shadow bank by the way, yep, it's great.

1132
00:50:16,520 --> 00:50:20,400
Speaker 2: So okay, okay, coming back to this again, right, so

1133
00:50:20,440 --> 00:50:22,799
Speaker 2: we're talking about like what causes two thousand and eight

1134
00:50:22,800 --> 00:50:25,719
Speaker 2: and how do these shadow banks like do this? And

1135
00:50:26,160 --> 00:50:29,319
Speaker 2: the answer is that they've turned all of these mortgages

1136
00:50:29,360 --> 00:50:33,520
Speaker 2: into these like fake securities they can trade, right, they

1137
00:50:33,560 --> 00:50:37,640
Speaker 2: package them all together and they find out something really crucial,

1138
00:50:37,840 --> 00:50:39,600
Speaker 2: which is that if they throw a bunch of loans

1139
00:50:39,600 --> 00:50:42,000
Speaker 2: that they obviously know are going to fail together and

1140
00:50:42,120 --> 00:50:44,160
Speaker 2: send them to a regulatory agency. And by the way,

1141
00:50:44,400 --> 00:50:46,319
Speaker 2: all of these like bonds that they're issuing have like

1142
00:50:46,520 --> 00:50:48,919
Speaker 2: grades based on supposed to be like how safe they.

1143
00:50:48,840 --> 00:50:50,759
Speaker 4: Are, and they figure out about that.

1144
00:50:50,880 --> 00:50:52,759
Speaker 2: Yeah, and they figure out that they can send a

1145
00:50:52,760 --> 00:50:55,239
Speaker 2: bunch of really shitty bonds. But if they package enough

1146
00:50:55,239 --> 00:50:57,640
Speaker 2: shitty bonds together, they could send them to the regulators,

1147
00:50:57,960 --> 00:51:00,560
Speaker 2: and the regulators would have would evaluate some of them

1148
00:51:00,560 --> 00:51:02,759
Speaker 2: as being good, and then you could sell the good

1149
00:51:02,840 --> 00:51:05,799
Speaker 2: ones to your pension fund because I thought it was

1150
00:51:05,840 --> 00:51:11,160
Speaker 2: a good bond and it made money. That's just lie.

1151
00:51:11,280 --> 00:51:13,960
Speaker 2: And then and then yes, and yes, and then and

1152
00:51:14,000 --> 00:51:16,840
Speaker 2: then behind the scenes, right, all of these fucking companies,

1153
00:51:16,840 --> 00:51:19,680
Speaker 2: all these shadow banks, all the regular banks, they're all

1154
00:51:19,719 --> 00:51:22,279
Speaker 2: doing these. They're all doing these credit default swaps, right,

1155
00:51:22,280 --> 00:51:24,279
Speaker 2: so they're all betting on which ones of these are

1156
00:51:24,320 --> 00:51:24,799
Speaker 2: going to fail.

1157
00:51:24,920 --> 00:51:27,399
Speaker 3: I'm putting all of these boys in time out. I'm

1158
00:51:27,400 --> 00:51:28,680
Speaker 3: gonna put them in the bottom.

1159
00:51:28,360 --> 00:51:29,840
Speaker 4: Of a pit so evil.

1160
00:51:30,160 --> 00:51:33,000
Speaker 2: And they start they start doing these, making these like

1161
00:51:33,080 --> 00:51:36,480
Speaker 2: even more complicated instruments right where. Now what they're what

1162
00:51:36,520 --> 00:51:39,200
Speaker 2: they're selling to you isn't just the package of mortgages.

1163
00:51:39,320 --> 00:51:42,480
Speaker 2: They're also selling you the credit default swaps with the loan.

1164
00:51:43,000 --> 00:51:45,840
Speaker 2: So theoretically, what's happening is like they've created an instrument that,

1165
00:51:46,000 --> 00:51:48,480
Speaker 2: regardless of what happens to the loan, you make money.

1166
00:51:48,719 --> 00:51:51,680
Speaker 3: That's not how anything works. No, it's bullshit.

1167
00:51:51,840 --> 00:51:54,000
Speaker 2: It's so obviously bullshit.

1168
00:51:54,320 --> 00:51:56,720
Speaker 3: I'm made of this fake thing where no matter what happens,

1169
00:51:56,760 --> 00:51:58,840
Speaker 3: I get rich. That's cool. I would love to do that.

1170
00:51:59,400 --> 00:52:01,759
Speaker 2: Yeah, And nobody was like, wait, well, I mean sometime

1171
00:52:01,760 --> 00:52:03,640
Speaker 2: a couple of people were, but like, like, people didn't

1172
00:52:03,840 --> 00:52:06,399
Speaker 2: just be like wait, hold on, no, obviously you can't

1173
00:52:06,440 --> 00:52:09,560
Speaker 2: make an asset that makes money regardless of whether the

1174
00:52:09,560 --> 00:52:10,520
Speaker 2: thing fails or not.

1175
00:52:10,680 --> 00:52:13,360
Speaker 3: I invented a money machine, Like that's fucking ridiculous.

1176
00:52:13,400 --> 00:52:15,520
Speaker 2: And then eventually yeah, it was like, no, they ran

1177
00:52:15,520 --> 00:52:16,680
Speaker 2: out of fucking mortgages.

1178
00:52:17,280 --> 00:52:17,520
Speaker 3: You know.

1179
00:52:17,920 --> 00:52:19,520
Speaker 2: One of the ways that the blame for this was

1180
00:52:19,520 --> 00:52:22,960
Speaker 2: deflected onto regular people was that they blamed the banks

1181
00:52:23,280 --> 00:52:25,160
Speaker 2: or like they blamed regular people for like not being

1182
00:52:25,160 --> 00:52:27,399
Speaker 2: able to pay the mortgages. But the thing is, by

1183
00:52:27,400 --> 00:52:28,839
Speaker 2: the time you get to the point where you're like

1184
00:52:29,000 --> 00:52:32,000
Speaker 2: packaging all that, you're betting on the mortgages. Right, if

1185
00:52:32,000 --> 00:52:34,640
Speaker 2: you're a bank, even if you're the regular bank, you

1186
00:52:34,680 --> 00:52:37,439
Speaker 2: don't make money off of like someone paying their mortgage back.

1187
00:52:37,760 --> 00:52:40,160
Speaker 4: You make money on betting on the mortgages.

1188
00:52:40,800 --> 00:52:43,560
Speaker 2: So you're incentivized to just keep giving out loans you

1189
00:52:43,680 --> 00:52:46,120
Speaker 2: know won't happen because you can sell those loans off

1190
00:52:46,160 --> 00:52:48,080
Speaker 2: to some other dipshit and then you and then you

1191
00:52:48,120 --> 00:52:50,120
Speaker 2: can bet on those loans that they're going to fail

1192
00:52:50,160 --> 00:52:50,919
Speaker 2: and you can make money.

1193
00:52:50,960 --> 00:52:52,640
Speaker 4: And that's how you make your money because you're.

1194
00:52:52,680 --> 00:52:56,520
Speaker 3: You're not a bank anymore. You're a bookie who's cheating.

1195
00:52:57,320 --> 00:52:57,600
Speaker 2: Yep.

1196
00:52:58,239 --> 00:52:59,520
Speaker 3: I don't think that's good Mia.

1197
00:53:00,280 --> 00:53:04,360
Speaker 2: No, this was the entire fucking financial system. We just

1198
00:53:04,440 --> 00:53:06,160
Speaker 2: let these people stay in power.

1199
00:53:06,680 --> 00:53:08,879
Speaker 3: And I'm just supposed to just continue living my life

1200
00:53:09,000 --> 00:53:09,279
Speaker 3: like this.

1201
00:53:10,320 --> 00:53:13,759
Speaker 2: I don't know why looking at this and then and

1202
00:53:13,800 --> 00:53:14,839
Speaker 2: then learning that all of these.

1203
00:53:14,800 --> 00:53:16,640
Speaker 4: People got fucking bailed up by the government and none

1204
00:53:16,680 --> 00:53:17,440
Speaker 4: of them went to prison.

1205
00:53:17,680 --> 00:53:20,880
Speaker 3: And do they know they're cheating liars who are faking

1206
00:53:20,920 --> 00:53:22,600
Speaker 3: and making it up? Or are they like so high

1207
00:53:22,640 --> 00:53:24,560
Speaker 3: on their own supply they're like They're like, no, bro, no,

1208
00:53:24,560 --> 00:53:26,200
Speaker 3: but this is totally gonna work. It's totally gonna work.

1209
00:53:26,280 --> 00:53:29,319
Speaker 2: Well, here's the thing. Some of them know and some

1210
00:53:29,400 --> 00:53:30,640
Speaker 2: of them don't.

1211
00:53:30,480 --> 00:53:32,360
Speaker 3: Because some of them believe that this is cool.

1212
00:53:32,560 --> 00:53:34,880
Speaker 2: Yeah, like some some of them legitimately thought that this

1213
00:53:35,000 --> 00:53:35,719
Speaker 2: was just going to work.

1214
00:53:35,760 --> 00:53:39,200
Speaker 3: Forefft, Like, do they believe their negative money, backed by

1215
00:53:39,239 --> 00:53:42,080
Speaker 3: other fake money, backed by the idea of promises of

1216
00:53:42,120 --> 00:53:43,720
Speaker 3: fake money. They think that's money.

1217
00:53:43,800 --> 00:53:46,080
Speaker 2: Yeah, yep, well thought was gonna work.

1218
00:53:46,120 --> 00:53:46,440
Speaker 5: It's not.

1219
00:53:46,680 --> 00:53:46,960
Speaker 3: It's not.

1220
00:53:47,200 --> 00:53:49,160
Speaker 2: Nope, And it turned out to not be any fucking money,

1221
00:53:49,160 --> 00:53:53,319
Speaker 2: and it blew up again, like entire countries, countries were

1222
00:53:53,360 --> 00:53:55,279
Speaker 2: buying these, they went bankrupt.

1223
00:53:55,600 --> 00:54:00,480
Speaker 3: So like this is less real than a board ape, nft.

1224
00:54:01,040 --> 00:54:05,480
Speaker 3: And that's really saying something. It's it's astonishing because at

1225
00:54:05,560 --> 00:54:07,319
Speaker 3: least the at least I can look at least I

1226
00:54:07,320 --> 00:54:09,400
Speaker 3: can look at the picture of the monkey. I can't

1227
00:54:09,400 --> 00:54:09,879
Speaker 3: look at.

1228
00:54:09,760 --> 00:54:11,879
Speaker 2: This no, like it like you can't look at the

1229
00:54:11,880 --> 00:54:15,040
Speaker 2: bet you're making on whether and whether monkey go down, Like.

1230
00:54:15,040 --> 00:54:17,719
Speaker 3: It's like like all my apes gone.

1231
00:54:18,120 --> 00:54:20,840
Speaker 4: Yeah, but it's suppressing because the entire world is just

1232
00:54:20,880 --> 00:54:21,319
Speaker 4: this Now.

1233
00:54:21,400 --> 00:54:22,879
Speaker 2: It's a shit the banks were doing where you're betting

1234
00:54:22,880 --> 00:54:24,480
Speaker 2: on whether mortgage would a feel, but now it's your

1235
00:54:24,520 --> 00:54:26,879
Speaker 2: betting on whether like what day we're going to drop

1236
00:54:26,880 --> 00:54:27,359
Speaker 2: a bomb on.

1237
00:54:27,280 --> 00:54:30,719
Speaker 3: A run, Like nothing is real and everything is gambling.

1238
00:54:31,040 --> 00:54:34,799
Speaker 2: Yeah yeah, And this is you know, what I would

1239
00:54:34,920 --> 00:54:38,240
Speaker 2: call a sort of terminal crisis stage of capitalism where alike.

1240
00:54:38,120 --> 00:54:41,160
Speaker 3: Because everything is so divorced from any material reality, from

1241
00:54:41,200 --> 00:54:43,120
Speaker 3: any good or service, Like.

1242
00:54:43,440 --> 00:54:45,000
Speaker 2: There is a limit to which you can run an

1243
00:54:45,120 --> 00:54:47,400
Speaker 2: entire economy that is purely based on gambling.

1244
00:54:47,560 --> 00:54:49,960
Speaker 4: Like, they're just there's a limit and we're going to

1245
00:54:50,040 --> 00:54:51,480
Speaker 4: hit it. Really so that's God.

1246
00:54:51,600 --> 00:54:53,360
Speaker 3: That's got to break, right.

1247
00:54:53,760 --> 00:54:56,400
Speaker 4: Yeah, yeah, it's going to break. It's good to break spectacularly.

1248
00:54:56,440 --> 00:54:58,200
Speaker 2: However, Comma, I do have.

1249
00:54:58,200 --> 00:54:59,560
Speaker 4: Good news for you.

1250
00:54:59,440 --> 00:55:00,640
Speaker 3: You don't, I do.

1251
00:55:00,800 --> 00:55:04,919
Speaker 2: I have good news you now actually understand what non

1252
00:55:04,960 --> 00:55:06,560
Speaker 2: bank financial intermediation is.

1253
00:55:07,000 --> 00:55:07,600
Speaker 3: No, I don't.

1254
00:55:09,360 --> 00:55:11,080
Speaker 4: I'm going to walk you through it. You actually do.

1255
00:55:11,960 --> 00:55:15,279
Speaker 2: So, I'm going to quote the IMS definition of non

1256
00:55:15,320 --> 00:55:21,000
Speaker 2: bank financial intermediation. Quote all entities outside the regulated banking

1257
00:55:21,040 --> 00:55:26,480
Speaker 2: system that perform the core banking functions credit intermediation, that

1258
00:55:26,640 --> 00:55:29,239
Speaker 2: is taking money from savers and letting it to borrowers.

1259
00:55:29,560 --> 00:55:34,759
Speaker 2: The four key aspects of intermediation are maturity, transformation. We

1260
00:55:34,880 --> 00:55:37,120
Speaker 2: know this one, right, This is this is what the

1261
00:55:37,160 --> 00:55:37,680
Speaker 2: bank does.

1262
00:55:37,760 --> 00:55:40,520
Speaker 3: The loan gets older. Yeah yeah, you gets paid back

1263
00:55:40,560 --> 00:55:41,080
Speaker 3: over time.

1264
00:55:41,320 --> 00:55:44,279
Speaker 2: Yeah, well it's you you turn your short term thing

1265
00:55:44,520 --> 00:55:46,479
Speaker 2: into a long term investment, or you.

1266
00:55:46,400 --> 00:55:47,000
Speaker 4: Do the opposite.

1267
00:55:47,080 --> 00:55:47,960
Speaker 3: Opposite, it's not good.

1268
00:55:48,600 --> 00:55:51,960
Speaker 2: They're both kind of a disaster, but like yeah, yeah, no,

1269
00:55:52,040 --> 00:55:53,800
Speaker 2: the opposite is kind of how we got.

1270
00:55:53,680 --> 00:55:58,080
Speaker 4: Into this mess. There's liquidity transformation, which we know this too.

1271
00:55:58,200 --> 00:56:01,120
Speaker 3: It's turned turning money into a thing that's not money.

1272
00:56:00,920 --> 00:56:03,279
Speaker 4: Yeah, or turning not money into a thing you can

1273
00:56:03,320 --> 00:56:04,000
Speaker 4: buy burger with.

1274
00:56:04,280 --> 00:56:06,200
Speaker 3: Okay, yeah, we got this.

1275
00:56:07,040 --> 00:56:08,399
Speaker 4: Leverage we also know.

1276
00:56:08,440 --> 00:56:10,959
Speaker 2: This, which is you go into a bunch of debt

1277
00:56:10,960 --> 00:56:15,600
Speaker 2: to buy something else. And then there's credit risk transfer,

1278
00:56:15,680 --> 00:56:17,560
Speaker 2: which we know that one too. It's the betting market.

1279
00:56:19,640 --> 00:56:23,520
Speaker 2: We're supposedly swapping the risk by both of you two

1280
00:56:23,520 --> 00:56:25,359
Speaker 2: are now betting on whether this thing is going to fail.

1281
00:56:25,600 --> 00:56:28,640
Speaker 3: So it sounds like even just like regular banking is

1282
00:56:28,800 --> 00:56:30,360
Speaker 3: kind of just gambling now.

1283
00:56:30,480 --> 00:56:32,160
Speaker 4: Yep, yep, yep.

1284
00:56:32,560 --> 00:56:34,319
Speaker 2: Well and it's fun too. So this is the thing

1285
00:56:34,360 --> 00:56:36,600
Speaker 2: that you used to be talked about more and isn't now.

1286
00:56:36,680 --> 00:56:40,680
Speaker 2: But like most of like like the world's corporations are

1287
00:56:40,719 --> 00:56:43,719
Speaker 2: also basically this now, like this has been a thing

1288
00:56:43,719 --> 00:56:45,799
Speaker 2: for a while. It's like the auto manufacturers don't make

1289
00:56:45,800 --> 00:56:47,680
Speaker 2: their money off of cars, I mean they sort of do.

1290
00:56:47,760 --> 00:56:49,160
Speaker 2: They make some money off cars, or like most of

1291
00:56:49,160 --> 00:56:50,880
Speaker 2: what they make their money off of is like the

1292
00:56:50,920 --> 00:56:54,520
Speaker 2: forward finance company, which is like the auto loans thing.

1293
00:56:54,800 --> 00:56:57,359
Speaker 2: Oh and then the auto loans thing trades a bunch

1294
00:56:57,360 --> 00:56:59,520
Speaker 2: of like does all of this other financial bullshit to

1295
00:56:59,520 --> 00:57:00,000
Speaker 2: make money?

1296
00:57:00,360 --> 00:57:02,600
Speaker 3: So, like, I don't think that's a good idea.

1297
00:57:03,360 --> 00:57:05,040
Speaker 4: That's that's what capitalism is.

1298
00:57:05,480 --> 00:57:10,879
Speaker 3: So everything, everything is fully reliant on this like.

1299
00:57:10,920 --> 00:57:11,960
Speaker 4: Stupid gambling bullshit.

1300
00:57:12,000 --> 00:57:16,600
Speaker 3: Emperor is wearing no clothes. Economy yep. And if anybody,

1301
00:57:16,600 --> 00:57:19,160
Speaker 3: if anybody points out that none of this is connected

1302
00:57:19,160 --> 00:57:21,920
Speaker 3: to a material reality, everything falls apart.

1303
00:57:22,160 --> 00:57:22,960
Speaker 4: Well, here's the thing.

1304
00:57:23,200 --> 00:57:25,080
Speaker 2: The thing that solves everything for falling apart is that

1305
00:57:25,120 --> 00:57:27,000
Speaker 2: the one thing you can do with your money is

1306
00:57:27,040 --> 00:57:29,960
Speaker 2: turn it into gun. Now I'm listening, and that's what

1307
00:57:30,000 --> 00:57:32,760
Speaker 2: stops of falling apart, right, because now I'm listening. And

1308
00:57:32,880 --> 00:57:35,080
Speaker 2: this is also a sort of graverism. But it's like

1309
00:57:35,360 --> 00:57:38,560
Speaker 2: behind every bank is a man with a gun because

1310
00:57:38,720 --> 00:57:41,479
Speaker 2: the reason that this money is even sort of real

1311
00:57:41,680 --> 00:57:45,080
Speaker 2: is that the bank can like you, like the police

1312
00:57:45,400 --> 00:57:46,960
Speaker 2: will come get you.

1313
00:57:46,880 --> 00:57:49,520
Speaker 4: Right, like men with guns will appear, and that coerce

1314
00:57:49,560 --> 00:57:50,240
Speaker 4: you to pay shit.

1315
00:57:50,680 --> 00:57:50,880
Speaker 2: Right.

1316
00:57:50,960 --> 00:57:56,000
Speaker 3: But what if what if instead of burger we bought gun?

1317
00:57:57,040 --> 00:57:59,320
Speaker 2: You know, Like this is what is broadly referred to

1318
00:57:59,440 --> 00:58:03,320
Speaker 2: as the revolution is it is broadly considered a negative

1319
00:58:03,320 --> 00:58:05,760
Speaker 2: by the financial sector. It is broadly considered a positive

1320
00:58:05,840 --> 00:58:07,240
Speaker 2: by everyone the fuck else.

1321
00:58:07,320 --> 00:58:08,160
Speaker 4: Okay, that's not true.

1322
00:58:08,200 --> 00:58:10,480
Speaker 2: It's not considered a positive by like, I guess, the

1323
00:58:10,480 --> 00:58:13,120
Speaker 2: people who own regular businesses. And this is like this

1324
00:58:13,200 --> 00:58:16,400
Speaker 2: shit that like, you know, it was kind of less

1325
00:58:16,480 --> 00:58:19,160
Speaker 2: unhinged back then, but like if you go read the.

1326
00:58:19,120 --> 00:58:20,960
Speaker 4: People who were like doing this shit in like the

1327
00:58:20,960 --> 00:58:24,000
Speaker 4: early nineteen hundreds, if you read the writing, it's all

1328
00:58:24,120 --> 00:58:26,400
Speaker 4: them being like, oh yeah, no, by the way, like

1329
00:58:26,720 --> 00:58:29,280
Speaker 4: a bunch of banks just like turned the entire Ottoman

1330
00:58:29,360 --> 00:58:31,840
Speaker 4: empire into like a debt peon, and now their entire

1331
00:58:31,880 --> 00:58:34,640
Speaker 4: economy is just dedicated to paying off these fucking loans.

1332
00:58:34,840 --> 00:58:37,840
Speaker 4: And this is like hideously fucking evil. Like they're all

1333
00:58:37,880 --> 00:58:39,160
Speaker 4: complaining about the same shit.

1334
00:58:39,440 --> 00:58:42,440
Speaker 3: And the important lesson we learned from that, The important

1335
00:58:42,480 --> 00:58:45,120
Speaker 3: lesson we learned from that was to do it more

1336
00:58:45,360 --> 00:58:50,000
Speaker 3: more oh yeah, yeah yeah, to invent increasingly more complicated

1337
00:58:50,040 --> 00:58:51,360
Speaker 3: ways of doing that.

1338
00:58:51,880 --> 00:58:55,080
Speaker 2: Yeah. And like this this is why the term third

1339
00:58:55,120 --> 00:58:58,040
Speaker 2: world is a slur, because because instead of being a

1340
00:58:58,040 --> 00:59:00,680
Speaker 2: political movement, because those the countries in the political movement

1341
00:59:00,720 --> 00:59:03,000
Speaker 2: that was called the Third World movement, all of their

1342
00:59:03,040 --> 00:59:06,440
Speaker 2: economies got fucking annihilated because they had these like loans

1343
00:59:06,440 --> 00:59:09,520
Speaker 2: whose interest rate could change, and the US jacked up

1344
00:59:09,520 --> 00:59:12,280
Speaker 2: all the interest rates and so suddenly their loans were

1345
00:59:12,360 --> 00:59:14,720
Speaker 2: like like the amount you had to like pay on

1346
00:59:14,760 --> 00:59:17,560
Speaker 2: the loans it went from like twenty percent or something

1347
00:59:17,600 --> 00:59:19,880
Speaker 2: to like fifty or one hundred or some shit. And

1348
00:59:20,360 --> 00:59:22,120
Speaker 2: you know, and like in these countries have never recovered,

1349
00:59:22,120 --> 00:59:26,120
Speaker 2: like Nigeria has never really economically recovered from the shit that.

1350
00:59:26,040 --> 00:59:26,560
Speaker 4: Happened to them.

1351
00:59:26,640 --> 00:59:28,680
Speaker 2: This This is why a whole bunch of Latin America

1352
00:59:28,880 --> 00:59:30,720
Speaker 2: is like this too, Like it was like why there's

1353
00:59:30,760 --> 00:59:33,200
Speaker 2: so much sort of like writing systemic poverty is that

1354
00:59:33,880 --> 00:59:37,959
Speaker 2: the economies were entirely transformed into machines to like pay

1355
00:59:38,000 --> 00:59:40,160
Speaker 2: back these fucking debts taken out by these dictators.

1356
00:59:40,920 --> 00:59:42,400
Speaker 4: This is the whole fucking economy now.

1357
00:59:42,440 --> 00:59:45,760
Speaker 2: And you know, there's other shadow banks that do other

1358
00:59:45,880 --> 00:59:48,440
Speaker 2: kind of completely unhand shit, right And I've been focusing

1359
00:59:48,440 --> 00:59:50,440
Speaker 2: this week on like specifically the kind that blew up

1360
00:59:50,440 --> 00:59:53,280
Speaker 2: the economy in two thousand and eight, But there's another

1361
00:59:53,400 --> 00:59:56,000
Speaker 2: kind that's like blowing up the economy right now, which

1362
00:59:56,000 --> 00:59:58,920
Speaker 2: is called private credit, which is I mentioned this briefly earlier,

1363
00:59:58,960 --> 01:00:02,720
Speaker 2: but private credit is and these like unregulated companies that

1364
01:00:02,760 --> 01:00:06,120
Speaker 2: are not banks give out unregulated loans with unknown terms

1365
01:00:06,160 --> 01:00:08,880
Speaker 2: to other companies, and then those loans go to shit,

1366
01:00:08,960 --> 01:00:10,680
Speaker 2: and there's a whole bunch of ways that can blow up,

1367
01:00:10,680 --> 01:00:12,600
Speaker 2: including by the way, these companies are funding a bunch

1368
01:00:12,640 --> 01:00:13,560
Speaker 2: of the AI bubble.

1369
01:00:13,760 --> 01:00:16,400
Speaker 3: Oh and that's a great investment. It's great, you know,

1370
01:00:16,440 --> 01:00:19,520
Speaker 3: because much much like a mortgage, there's a real physical

1371
01:00:19,560 --> 01:00:22,800
Speaker 3: thing like a house involved, Right, it's not just vibes.

1372
01:00:23,160 --> 01:00:24,640
Speaker 2: Oh yeah, oh molly molly.

1373
01:00:24,800 --> 01:00:26,840
Speaker 4: They those motherfuckers. I'm gonna talk about this a bit.

1374
01:00:26,880 --> 01:00:28,320
Speaker 2: I might have had just run on for this part

1375
01:00:28,360 --> 01:00:30,600
Speaker 2: of it too, just because like ED does this all

1376
01:00:30,600 --> 01:00:33,560
Speaker 2: the time. But like those motherfuckers out there selling securities

1377
01:00:33,560 --> 01:00:39,480
Speaker 2: that are backed by fucking graphics cards, like at least

1378
01:00:39,680 --> 01:00:41,720
Speaker 2: the more I can't believe I'm fucking saying this, but

1379
01:00:41,800 --> 01:00:45,320
Speaker 2: like at least the mortgage backed securities, like there was

1380
01:00:45,360 --> 01:00:47,600
Speaker 2: a house you could steal to get your money back

1381
01:00:48,880 --> 01:00:50,400
Speaker 2: graphics cards ball.

1382
01:00:50,200 --> 01:00:54,360
Speaker 3: All my apes aren't my oh my apes are gone.

1383
01:00:54,960 --> 01:00:58,120
Speaker 2: Like there's other ones that like it's it's so bad,

1384
01:00:58,400 --> 01:01:04,440
Speaker 2: it's just bad. But that's for another time, because it

1385
01:01:04,560 --> 01:01:07,680
Speaker 2: is late as fuck and we are out of here. Mollie.

1386
01:01:07,680 --> 01:01:10,520
Speaker 2: Thank you, Thank you for sitting and enduring an hour

1387
01:01:10,720 --> 01:01:13,120
Speaker 2: of you knowing what a shadow bank is.

1388
01:01:13,160 --> 01:01:16,680
Speaker 3: Now I almost know what a bank is. I'm still

1389
01:01:16,680 --> 01:01:18,320
Speaker 3: working on the rest of it, but I think I'm

1390
01:01:18,320 --> 01:01:19,040
Speaker 3: getting closer.

1391
01:01:19,280 --> 01:01:21,600
Speaker 4: I believe in you. I think we've made for a

1392
01:01:21,680 --> 01:01:22,440
Speaker 4: progress today.

1393
01:01:23,120 --> 01:01:23,560
Speaker 2: I don't know.

1394
01:01:23,720 --> 01:01:25,920
Speaker 4: Now you can kind of understand what's going on.

1395
01:01:25,960 --> 01:01:30,200
Speaker 2: When this sector explodes again in like two weeks.

1396
01:01:30,000 --> 01:01:31,280
Speaker 3: You'll have to explain it to me again.

1397
01:01:31,320 --> 01:01:32,520
Speaker 4: Then I will be happy to.

1398
01:01:37,920 --> 01:01:40,440
Speaker 1: It Could Happen Here is a production of cool Zone Media.

1399
01:01:40,600 --> 01:01:43,680
Speaker 1: For more podcasts from cool Zone Media, visit our website

1400
01:01:43,760 --> 01:01:46,320
Speaker 1: cool Zonemedia dot com, or check us out on the

1401
01:01:46,320 --> 01:01:50,280
Speaker 1: iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.

1402
01:01:50,720 --> 01:01:52,640
Speaker 1: You can now find sources for it Could Happen Here

1403
01:01:52,680 --> 01:01:55,640
Speaker 1: listed directly in episode descriptions. Thanks for listening.